There have been a series of cases in which civil pecuniary penalties have been imposed on persons who have admitted or been found to have contravened provisions of the Corporations Act 2001 (Cth) or the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).
The following are all such judgments in 2022 (until 20 April) and illustrate the court’s current approach to the quantum of penalties in this area.
In Australian Securities and Investments Commission v RI Advice Group Pty Ltd (No.3)  FCA 84 (2 February 2022), the court ordered penalties against the first defendant (RI) for contraventions of s961L of the Corporations Act. That is, by failing to take reasonable steps to ensure the second defendant (Mr Doyle) complied with each of the best interests obligations in ss961B, 961G, 961H and 961J of the Corporations Act.
There was a dispute as to the number of contraventions and the court held that there were 12 contraventions of s961L by RI in three distinct phases (at -). The maximum penalty for each contravention was $1 million and, therefore, the total possible maximum was $12 million for all 12 contraventions. ASIC contended that the penalty should be $6 million.
RI submitted that a penalty in the range of $500,000 to $1 million was appropriate. Applying the relevant penalty factors, Moshinsky J ordered that RI pay a pecuniary penalty of $6 million for its contraventions of s961L (at -).
Mr Doyle and his company were authorised representatives of RI. The court rejected his application for relief from liability under s1317S of the Corporations Act (at -). There were 52 contraventions of s961Q(1) by him (at ). ASIC argued for a total penalty of $250,000 while Mr Doyle contended it should only be $50,000 (if there were a penalty). The court ordered him to pay a total penalty of $80,000 (at -).
In Australian Securities and Investments Commission v Aware Financial Services Limited  FCA 146 (17 February 2022), the defendant, in trade or commerce, accepted payment from certain clients for the provision of certain services, when there were reasonable grounds for believing the defendant would not be able to supply the financial services to all such clients within the period specified, and thereby contravened s12DI(3) of the ASIC Act.
Between 21 August 2014 and 30 June 2018, approximately 25,300 clients paid fees to the defendant without receiving the appropriate number of annual reviews from it. The maximum penalty for a contravention of s12DI during the period has ranged from $1.7 million to $2.1 million.
The parties jointly proposed an agreed penalty of $20 million in respect of all of the contraventions of s12DI(3) of the ASIC Act. Applying the principles for pecuniary penalties proposed by parties (at -), Moshinksy J gave his reasons as to why he held that the proposed penalty of $20 million was appropriate (at -).
In Australian Securities and Investments Commission v Rio Tinto Limited (No.2)  FCA 184 (7 March 2022), the defendant admitted a breach of the continuous disclosure obligation in s674(2) of the Corporations Act.
Relevantly, the defendant admitted that on one occasion (on and from 21 December 2012 until 17 January 2013) it failed to notify the ASX of certain information that was:
(a) not ‘generally available’ within the meaning of s676, and for the purpose of s674(2)(c)(i) of the Corporations Act
(b) information that a reasonable person would have expected, if it had been generally available, to have had a ‘material effect’ on the price or value of the defendant’s securities, within the meaning of s677, and for the purpose of s674(2)(c)(ii) of the Corporations Act
(c) not discoverable by anyone outside the defendant. The defendant is (and was at all relevant times) one of the largest mining and metals companies listed on the ASX, and one of the world’s largest mining companies (at ).
The relevant maximum amount was $1 million. ASIC and the defendant proposed an agreed penalty of $750,000. Applying the principles for the determining of penalties including for proposed agreed penalties, Yates J held that the proposed penalty of $750,000 was appropriate (at -).
In Australian Securities and Investments Commission v Westpac Banking Corporation (The Consumer Credit Insurance Case)  FCA 359 (7 April 2022), the bank admitted contraventions of s12DM(1) of the ASIC Act and s912A(1)(c) of Corporations Act.
Only the breach of s12DM(1) gave rise to a civil penalty. Section 12DM(1) prohibits a person, in trade or commerce, from asserting a right to payment for unsolicited financial services or unsolicited financial products. The bank admitted to 141 contraventions of 12DM(1) over a period of nearly two years.
The contraventions related to the issue of a consumer credit insurance policy to a customer of the bank who did not seek it and who did not agree to its acquisition. The affected customers paid a total of approximately $11,000 in premiums for their policies which was effectively refunded. The maximum penalty for each contravention was $1,700,000 to $1,800,000 and, therefore, the theoretical maximum for all contraventions was in excess of $240 million (at ).
The parties jointly submitted that $1.5 million was an appropriate penalty for all contraventions of s12DM(1). Katzmann J held that the agreed penalty was an appropriate penalty, applying the principles for agreed penalties and the penalty factors (at -).
Dan Star QC is a Senior Counsel at the Victorian Bar, ph 03 9225 8757 or email email@example.com. The full version of these judgments can be found at austlii.edu.au. Numbers in square brackets refer to a paragraph number in the judgment.