Gordon J
In this matter the Court found that the directors of the Bunurong Land Council (Corporation) failed to exercise their powers and duties as required by the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act) and made declarations of contraventions, disqualifications orders, compensation orders, pecuniary penalties and costs orders against the former directors.
Registrar's investigation of the Corporation
Since 1 July 2007, the Corporation has been registered under the CATSI Act, with its registration changed to Small Corporation since 30 June 2013. On 12 September 2013, a delegate of the Registrar of Aboriginal and Torres Strait Islander Corporations (ORIC) examined the books and records of the Corporation.
On 6 November 2013, ORIC received the examiners’ report, which concluded that the financial records of the Corporation were inadequate and the Corporation appeared to be insolvent. On 24 January 2014, ORIC determined that the corporation would be under special administration from 28 January 2014 until 30 June 2014.
On 28 January 2014, ORIC issued notices requiring each former director of the corporation to attend and answer questions put to them about the examinable affairs of the corporation following which ORIC commenced proceedings in court against the former directors for contraventions of the CATSI Act.
The relevant statutory duties are:
a duty to act with care and diligence, s 265-1(1)
a duty not to improperly use the director’s position, s 265-10(1)
a duty to take all reasonable steps to comply with, or to secure compliance with, Pts 7-2 and 7-3 of the CATSI Act, which impose obligations in relation to record keeping and reporting, s 363-1(1).
Contraventions of s 265-1(1)
The Court identified at [126 - 129] that each former director had admitted that they contravened s 265-1(1) of the CATSI Act by:
Failing to ensure that the Corporation took steps or had systems to comply with:
Requirements of the Corporation’s Rule Books to hold AGMs, to hold and keep minutes of Committee/directors’ meetings, that the Corporation issue receipts for money received by the Corporation, that the Corporation’s accounts be approved for payment at directors’ meetings, and that the Corporation’s money be deposited in the Corporation’s bank account
The requirement in s 85-15 CATSI Act to use the Corporation’s name and ICN on its invoices
The record keeping requirements imposed by s 322-10(1) and (2) CATSI Act, and the requirements of cl 22 of the First Rule Book and cl 8 of the Second Rule Book that financial records be kept at the Corporation’s document access address, and
For the 2012-2013 financial year, the requirement in reg 333-16.01 of the Regulations to prepare a financial report.
Failing to ensure the Corporation took steps to comply with its taxation obligations.
Contravention of s 265-10(1)
At [130] the, Ms Murray admitted she contravened s 265-10(1) by making unaccounted withdrawals, requiring payments from third parties, intermingling the Corporation's money with her own and preventing the corporation from determining whether it could pay its creditors.
Contravention of s 363-1(1)
Each respondent admitted they contravened their statutory duties and materially prejudiced the interest of the Corporation's members.
Pecuniary Penalty
A maximum penalty of $200,000 applies to each contravention. Gordon J considered the proper assessment of pecuniary penalties for multiple contraventions and the need to have regard to any compensation and disqualification orders and the centrality of deterrence. His Honour noted at [201], the capacity to pay is a relevant consideration and in the present case, must be given proper (not little) weight. None of the respondents has capacity to pay any significant pecuniary penalty.
Gordon J considered the cumulative effect of the separate penalties proposed including disqualification and compensation orders to ensure the pecuniary penalty imposed was ‘just and appropriate’. On the facts, the total pecuniary penalty was set, at [216]:
Ms Murray, $25,000
Mr Brown and Ms Nichols, $10,000 each and
Ms Dickson, $5,000.
Gordon J made orders disqualifying Ms Murray from managing, or being a director of, any Aboriginal and Torres Strait Islander corporation for seven years. Ms Brown, Ms Dickson and Ms Nichols each were disqualified from managing, or being a director of, any Aboriginal and Torres Strait Islander corporations for three years.
Ms Murray was ordered to pay compensation to the Corporation of $7,717.98 (unremitted interest incurred on the Corporation's tax debt).
Gordon J also ordered that the former directors pay ORIC’s costs, however, due to the financial position of each respondent the order cannot be enforced without the leave of the Court.