R v Baldock

[2011] QDC 72

DISTRICT COURT OF QUEENSLAND

CITATION:

 R v Baldock [2011] QDC 72

PARTIES:

The Queen
(respondent)

v

Ian Frank Baldock
(applicant)

FILE NO/S:

Indictment No 2509 of  2010

PROCEEDING:

Application pursuant to s 590AA Criminal Code

ORIGINATING COURT:

District Court of Brisbane

DELIVERED ON:

17 May 2011

DELIVERED AT:

Brisbane

HEARING DATE:

9 May 2011

JUDGE:

Rafter SC DCJ

RULING:

The Australian Enterprise Superannuation Fund is an employer-sponsored fund and accordingly s.68(1)(b) Superannuation Industry (Supervision) Act 1993 is applicable.

CATCHWORDS:

CRIMINAL LAW – PARTICULAR OFFENCES –MISCELLANEOUS OFFENCES AND MATTERS – VICTIMISATION – REGULATED SUPERANNUATION FUND – EMPLOYER-SPONSORED FUND – PUBLIC OFFER FUND - OFFENCE AGAINST A RESPONSIBLE OFFICER OF A CORPORATE TRUSTEE OF AN EMPLOYER-SPONSORED FUND - where the applicant was charged with two counts pursuant to s 68(1)(b) Superannuation Industry (Supervision) Act 1993 – where the applicant as Executive Director of Queensland Retail Traders and Shopkeepers Association wrote to the complainant in count 1 making his position redundant – where the applicant wrote to the complainant in count 2 terminating his services as auditor - whether an employer-sponsored fund and a public offer fund are mutually exclusive - whether Australian Enterprise Superannuation Pty Ltd is an employer-sponsored fund

Criminal Code (Qld), s 590AA
Superannuation Industry (Supervision) Act 1993 (Cth), s 10, s 16(1) & (3), s 18, s 68(1)(b)

COUNSEL:

C Reid for the applicant
GR Rice SC for the respondent

SOLICITORS:

Patrick Murphy for the applicant
Commonwealth Director of Public Prosecutions for the respondent

Introduction

1. The applicant is charged with two counts contrary to s 68(1)(b) Superannuation Industry (Supervision) Act 1993 (“SIS Act”). Count 1 alleges that between 10 April 2006 and 13 May 2006 the applicant committed an act of victimisation against a responsible officer of a corporate trustee of an employer sponsored fund. Count 2 alleges that on or about 12 April 2006 the applicant attempted to commit an act of victimisation against a responsible officer of a corporate trustee of an employee- sponsored fund.

1. Section 68 SIS Act provides:

“68  Victimisation of trustees etc.

Prohibition

(1)       A person must not commit an act of victimisation against:
             (a)       a trustee of an employer-sponsored fund; or
             (b)       a responsible officer of a corporate trustee of an    employer-sponsored fund.

Penalty: Imprisonment for 2 years.”

1. The offence provision applies to acts of victimisation against a trustee or responsible officer of an employer-sponsored fund.  Mr Reid for the applicant submits that the relevant fund is a “public offer fund” and not an “employer-sponsored fund” and therefore the offence provision is not applicable. 

Factual background

1. The relevant facts for the purposes of the application are set out in the helpful written submissions of Mr Rice SC for the respondent and have not been disputed. 

1. The Queensland Retail Traders and Shopkeepers Association (“QRTSA”) is registered as an employer organisation under the Industrial Relations Act 1999(Qld).  Its employer members carry on the business of retail grocer, shopkeeper or general retailer.  The Association charges its members an annual subscription. 

1. QRTSA has a number of objects under its constitution but broadly they involve promoting the interests of employer members.  At all relevant times the applicant was Executive Director of QRTSA. 

1. The Australian Enterprise Superannuation Fund (“AESF”) was established by QRTSA on 15 November 1988 pursuant to Deed of Trust dated 11 October 1998, as varied from time to time.  It was originally named QRTSA Superannuation Fund until the name was changed on 10 September 1999. 

1. The trustee of the fund is Australian Enterprise Superannuation Pty Ltd (“AES”).  The complainant in respect of Count 1 was a director of AES.  He was also employed by QRTSA as its Operations Manager.  The complainant in respect of Count 2 was also a director of AES.  As a partner of Rawsons Chartered Accountants, he had held an appointment as auditor of QRTSA under the requirements of QRTSA’s constitution since 1986. 

1. The applicant was on friendly terms with Michael McGarry, who was a director and chairman of Australian Enterprise Promotions Pty Ltd (AEP).  AEP had a financial relationship with both the fund trustee, AES, and the Association, QRTSA.  From 2001 AES had contracted with AEP for the latter to provide marketing and secretarial services to the trustee.  This provided substantial income to AEP.  From the money received in this way AEP paid a proportion to QRTSA in return for the provision of marketing assistance and resources to AEP and for QRTSA’s publicly supporting AESF with its employer members, from whom AESF sourced a large proportion of its membership.  The money received by QRTSA from AEP was important to its financial viability.

1. Between 1992 and 16 February 2004 Mr McGarry was a director of AES.  On 5 February 2004 Australian Prudential Regulation Authority (“APRA”) commenced an investigation into the affairs of AESF.  One aspect of the investigation related to the proper fulfilment of fiduciary duties in the context of the contractual arrangements between AES and AEP.  Mr McGarry resigned as a director of AES and the complainant in respect of Count 2 took his place.

1. On 21 November 2005, APRA disqualified Mr McGarry from holding or carrying out any “responsible officer” duties with respect to AES.  This led to a dispute between AES and AEP over whether, and how, AEP could continue to carry out its contractual obligations for the provision of marketing and secretarial services.  This dispute continued for some months.  QRTSA had a strong interest in the outcome as it received significant income from AEP as a consequence of its arrangements with AES.

1. On 1 March 2006 the trustee, AES, gave notice to AEP advising of its decision to terminate its contract with AEP.  Over the next few weeks there were unsuccessful attempts to re-negotiate alternative contracts.  In the meantime payments by AEP to QRTSA had ceased from December 2005 which put it in a difficult financial position.  The Crown case is that the applicant was both aware of and highly concerned about these developments and their significance to QRTSA. 

1. On the morning of 10 April 2006 the applicant handed to the complainant in respect of Count 1 a letter stating, “I have decided to make your position redundant as from Friday 12 May”.  On the same day the applicant wrote to the complainant in respect of Count 2 stating “This is to advise that the QRTSA will from today’s date not require your services as auditor etc”. 

1. The complaints were directors of AES and had been involved in the decision to sever relations with AEP, with consequential financial implications on QRTSA.  The Crown case is that the applicant’s acts of making the complainant in respect of Count 1 redundant and attempting to remove the complainant in respect of Count 2 as auditor are the acts of “victimisation”. 

Statutory provisions

1. The term “employer-sponsored fund” is defined in s 16(3) SIS Act as follows:

“An employer-sponsored fund is a regulated superannuation fund that has at least one employer-sponsor.”

1. The term “employer-sponsor” is defined in s 16(1) as follows:

“(1)  An employer-sponsor of a regulated superannuation is an   employer who:
             (a)       contributes to the fund; or
             (b)       would, apart from a temporary cessation of    contributions, contribute to the fund;
         for the benefit of:
             (c)       a member of the fund who is an employee of:

(i)        the employer; or

(ii)       an associate of the employer; or
              (d)      the dependants of such a member in the event of the    death of the member.”

1. The definitions provision in s 10 states that the term “regulated superannuation fund” has the meaning given to it by s 19.

1. Section 19 defines “regulated superannuation fund” as follows:

“19 Regulated superannuation fund
Definition

(1)A regulated superannuation fund is a superannuation fund in respect of which subsections (2) to (4) have been complied with.

Fund must have a trustee

(2)The superannuation fund must have a trustee.

Trustee must be a constitutional corporation or fund must be a pension fund

(3)Either of the following must apply:

(a)  the trustee of the fund must be a constitutional

     

corporation pursuant to a requirement contained in

     

the governing rules;

(b)  the governing rules must provide that the sole or

      

primary purpose of the fund is the provision of

      

old-age pensions.

Election by trustee

(4)The trustee or trustees must have given to APRA, or such other body or person as is specified in the regulations, a written notice that is:

(a)  in the approved form; and

(b)  signed by the trustee or each trustee;

electing that this Act is to apply in relation to the fund.”

Evidence that AESF is an employer-sponsored fund

1. The witness Steven Blinco is manager of enforcement at APRA.  He produces a copy of the trustee’s notice of election dated 17 October 1994 given pursuant to s 19(4) to the Insurance and Superannuation Commission (as it then was).  Section 19(5) provides that an election is irrevocable.  The notice given by the trustees electing to be regulated contains an acknowledgement of that.  Mr Blinco also identifies in his statement that the trustee holds a licence required by APRA to operate a regulated superannuation entity. 

1. The consolidated trust deed establishing the fund identifies “Australian Enterprise Superannuation Pty Ltd ACN 057 701 989” as the corporate trustee of the fund.

1. Christopher Hoey, a former secretary to the directors of AES provides a list of the employer-sponsors of the fund.  He also confirms that QRTSA itself is an employer which contributed to the fund on behalf of employees.  He provides a number of reports which show the Association’s contributions on behalf of its employees.  The complainant in respect of Count 1 was an employee of QRTSA which made employer contributions to the fund on his account.  He says in his statement that:

“The Australian Enterprise Superannuation Fund was established by QRTSA as the “principal employer” on 15 November 1988 to provide QRTSA members with an alternative to the industry superannuation funds sponsored by trade unions.
…
My association with the fund dates back to the commencement of my employment with QRTSA.  I became a member of the fund on 2 September 2003.  Throughout the period of my employment with the QRTSA all of my mandated superannuation contributions were paid to the fund by QRTSA.”

1. The complainant in respect of Count 1 also produces copies of his annual member statements for the financial years ending 30 June 2004 to 2006.  These documents refer to QRTSA as the employer. 

1. Regulated superannuation funds are required to lodge annual returns with APRA in a prescribed form.  These forms detail amongst other things the assets, liabilities, income and expenses of the superannuation entity for the relevant period.  The annual returns lodged with APRA by AESF indicate that AESF received contributions from employers in each of the years leading up to the time of the alleged offences.

1. The trust deed itself contemplates arrangements between the trustee and “participating employers” for contributions to the fund by the employer on behalf of employee members.[1]

   [1] See Clauses 8(a)(iii), 11(3)(b), 23(b) and 36 of the trust deed

The contentions of the parties

1. Mr Reid for the applicant accepted that the evidence established with the fund fulfilled the definition of “employer-sponsored fund”. He submitted that because AESF had elected to become a “public offer fund”, s 68 did not apply. He particularly emphasised that s 68 which is contained in Part 7 SIS Act is the only provision in that part which applies to an “employer-sponsored fund”. Part 7 is headed, “Provisions applying only to regulated superannuation funds”. Mr Reid relied on the importance of a statutory provision which contained criminal sanctions being expressed in clear terms.

1. Mr Rice SC for the respondent submitted that the two types of fund operation were not mutually exclusive and so the fact that AESF was a “public offer fund” did not preclude it from also being an “employer-sponsored fund”. 

Conclusion

1. The trust deed allowed the fund to operate as a public offer fund.  AESF became a public offer fund on or about 13 September 2000.  This allowed AESF to invite members of the public to become members in addition to employees of employer sponsors. 

1. Section 18 SIS Act defines the circumstances in which a fund will be a public offer superannuation fund. One of those circumstances as set out in s 18(1)(a)(ii) is that a standard employer fund also has at least one non-sponsored member. This tends to suggest that a fund may operate in both capacities.

1. There is nothing in the SIS Act which precludes a fund operating in both capacities. The financial documents suggest that AESF was predominantly an employer-sponsored fund.

1. There is no ambiguity in s 68 which requires that it be construed in the manner suggested by Mr Reid. I therefore conclude that the AESF is an employer-sponsored fund and accordingly s 68(1)(b) SIS Act is applicable.