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FEDERAL COURT OF AUSTRALIA

Australian Prudential Regulation Authority v Derstepanian and Another

[2005] FCA 1121

Weinberg J

16 August 2005 - Melbourne

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Weinberg J.    This is an application, pursuant to s 196 of the Superannuation Industry (Supervision) Act 1993 (Cth) (the SIS Act), for declarations that the respondents have contravened ss 62(1) and 109(1) of that Act, and orders for the imposition of monetary penalties under s 196(3).

  2  The contraventions in question are set out in detail in an agreed statement of facts, signed by the parties on 10 June 2005, and tendered by consent. In substance, the applicant has alleged, and the respondents have admitted, that on or about 30 June 1999 the respondents, who were the trustees of the Tunstall Bond Superannuation Fund (the fund) caused the fund to enter into an agreement to purchase 2903 master patterns and jewellery manufacturing dies from Tunstall Bond Pty Ltd for the sum of $165,870, that amount being substantially greater than the true value of the patterns and dies. The effect of that transaction was to allow the respondents, and/or Tunstall Bond, to retain and use for their own purposes money that should have been contributed to the fund for the benefit of its members.

  3  The agreed statement of facts is a lengthy document. In summary, it recounts the following background facts:

 •  the fund is a superannuation entity as defined under s 10(1) of the SIS Act;

 •  the first respondent was at all material times a trustee of the fund;

 •  the second respondent was a trustee of the fund from some time during the financial year ending 30 June 1998 until 21 June 2001;

 •  as at 21 June 2001, the fund had 17 members, including the respondents;

 •  in addition, 13 members had left the fund but had not been paid benefits totalling $8008.42;

 •  Tunstall Bond was at all material times controlled by the first respondent, and was the employer-sponsor of the fund until about 8 October 1999;

 •  Sarkis Manufacturing Australia Pty Ltd, a company controlled by the first respondent, carried on the business of manufacturing and selling jewellery from 27 January 1999, and was the employer-sponsor of the fund from 8 October 1999; and

 •  on or about 8 October 1999, Tunstall Bond transferred all its assets to Sarkis, and ceased trading.

  4  The agreed statement of facts then states at para 14:

   

The parties have settled this proceeding on the basis that the court:

 (a)  Declare (in accordance with s 196(2) of the SIS Act) that the conduct detailed in paras 30-34 below (which is admitted by the respondents) involved a serious contravention of ss 62 and 109(1) the SIS Act, in that the respondents:

 (i)  contravened s 109(1) of the SIS Act by causing the fund to enter into a transaction at other than arm's length, on terms and conditions that were more favourable to Tunstall Bond than those which it would be reasonable to expect would have applied if they had been dealing with Tunstall Bond at arm's length; and

 (ii)  contravened s 62(1) of the SIS Act by failing to ensure that the fund was maintained solely for one or more of the purposes identified in s 62(1) of the SIS Act, instead maintaining the fund for the purpose or significant purpose of benefiting themselves and/or Tunstall Bond;

 (b)  order (in accordance with s 196(3) of the SIS Act) the first respondent to pay a pecuniary penalty in the sum of $100,000 in respect of the contraventions the subject of the above declarations.

  5  Paragraph 15 is in the following terms:

   

The respondents deny the other alleged contraventions of the SIS Act detailed in the applicant's statement of claim the subject of paras 17-29 and 35-39 hereof.

  6  The parties note that the respondents have, as part of the agreement to settle this proceeding, paid compensation in the sum of $226,497.84. That figure relates to loss that flowed from all of the alleged contraventions of the SIS Act contained in the applicant's statement of claim, notwithstanding the fact that some of the allegations are denied.

  7  The agreed statement of facts then sets out a series of alleged contraventions, none of which are the subject of this proceeding. They are included for completeness, in order to explain the nature of the "bargain" reached between the applicant and the respondents. Plainly, they are not to be taken into account in assessing the monetary penalty that is to be fixed in relation to the contraventions that are admitted.

  8  The admitted contraventions are in the following terms:

   

The third agreement

 30.  On or about 30 June 1999, the respondents, as trustees of the fund, entered into an agreement with Tunstall Bond (the third agreement) to purchased 2903 master patterns and jewellery manufacturing dies from Tunstall Bond for the sum of $165,870. The third agreement is attached as Annexure 5.

 31.  A subsequent arms' length valuation undertaking by the acting trustee of the fund dated 12 July 2001 determined that the value of the dies was substantially less than $165,870. This valuation is attached as Annexure 2.

 32.  No monetary payment was made by the fund for the dies the subject of the third agreement. Instead, journal entries were made whereby contributions due to the fund by Tunstall Bond were offset against the purchase price payable by the fund pursuant to the third agreement.

 33.  The patterns and dies the subject of the third agreement were never specifically identified nor separately stored or maintained by Tunstall Bond after their sale to the fund.

 34.  The effect of the third agreement was to allow the respondents and/or Tunstall Bond to retain and use for their own purposes money that should have been contributed to the fund for the benefit of its members.

 

The second Deed of Licence

 35.  On or about 30 June 1999 the respondents, as trustees of the fund, entered into a further Deed of Licence (the second deed) with Tunstall Bond whereby Tunstall Bond was "licensed" to use dies which were the property of the fund. The second deed provided, inter alia for:

 (a)  licence payments for the dies the subject of the third agreement be made by Tunstall Bond to the fund at $52,360.79 per annum for four years; and

 (b)  termination of the second deed and recovery of the dies the subject of the third agreement by the trustee of the fund in the event that licence payments fell into arrears by more than 7 days.

 

The second deed is attached as Annexure 6.

 36.  No payments were ever made to the fund under the second deed. Further, at the time the second deed was entered into and thereafter the respondents were aware that Tunstall Bond was unable or likely to be unable to make the payments under the second deed.

 37.  The respondents, as trustees of the fund, made no or no reasonable efforts to enforce the second deed or recover moneys due from Tunstall Bond to the fund. In particular, the second deed was not terminated by the respondents despite the non-payment of license fees, nor did the respondents make any or any reasonable efforts to recover possession of the dies.

  9  On 21 June 2001, the applicant removed the respondents as trustees of the fund, pursuant to s 133(1) of the SIS Act. On 14 April 2003, the applicant disqualified them from being trustees, or the responsible officers of a body corporate that is a trustee of a superannuation entity, pursuant to s 120A(1).

  10  The financial position of the fund, as at 30 June 1999, was as follows:

   

 45.  As at 30 June 1999,^[1] the fund's assets consisted of:

 (a)  Dies (owned by the fund as a result of the first, second and third agreements) with a book value of $285,960, although:

 (i)  an independent valuation of all the dies in the possession of Sarkis Manufacturing conducted on or about 12 July 2001 indicated that the dies would fetch not more than $15,000-$25,000 at auction;^[2]

 (ii)  the dies were in the possession of Sarkis Manufacturing and were not distinguishable from other dies in the possession of Sarkis Manufacturing because they had never been stored separately or identified in any of the agreements;

 (iii)  the actual value of the dies "owned" by the fund was estimated to be $10,000 by the acting trustee (and the dies were subsequently purchased for $10,000 by Sarkis Manufacturing);

 (b)  $173,062.96 in arrears owing under the terms of the deed of assignment owed to the fund by Sarkis Manufacturing;

 (c)  $164.96 held in a trust account;

 (d)  $1104 in future income tax benefits.

 46.  No cash employer contribution was paid into the fund at any material time.

 47.  As at 30 June 1999, the fund's liabilities were $83,726.16.

 48.  As at 30 June 1999 the balance sheet shows that the fund has allocated $203,503.08 to members' accounts although a second record shows that $230,602.66 was allocated to members' accounts in 1999.

 49  As 99.5% of the assets of the fund were in the form of jewellery dies, the real value of which was $10,000, the fund was unable to meet its liabilities or to make payments to members. (Footnotes in original.)

  11  The current proceeding was commenced on 30 April 2004. A court-ordered mediation was held on 13 August 2004. At the mediation terms of settlement were signed which included the following:

   

 (a)  the respondents would pay compensation to the fund in the amount of $226,497.84 (this amount including compensation to the members of the fund in the amount of $151,497.84; wind-up fees of $55,000; and $20,000 for accounting and auditing fees);

 (b)  the respondents would indemnify the acting trustee for the tax debt owed by the fund to the Australian Taxation Office (the ATO) [as at 8 September 2003, the ATO assessed the tax liability of the fund in the sum of $97,282.75. This assessment is disputed by the respondents];

 (c)  Sarkis Manufacturing would purchase the dies from the acting trustee by 20 December 2004 for $11,000 (including GST);

 (d)  the parties would jointly submit to the court in respect of 2 agreed serious contraventions of the SIS Act, that it would be appropriate that the court make a pecuniary penalty order against the first respondent in the sum of $100,000, and that no pecuniary penalty should be imposed on the second respondent;

 (e)  the first respondent would pay $100,000 to the applicant to be held in trust by the applicant until such time as the court made final orders in the proceeding, at which time that amount would be applied to any pecuniary penalty order made by the court and, if any surplus remained, be returned to the first respondent.

  12  The steps required by the above agreement to be completed had not been implemented prior to 17 February 2005. On or about that date, the applicant informed the respondents that it regarded the agreement as having been repudiated. The parties now disagree as to whether the terms of settlement dated 13 August 2004 remain on foot. However, they both accept that it is unnecessary to resolve that disagreement. The fact is that the respondents have paid compensation in the amount of $226,497.84, which is held by the applicant on trust for the fund, together with an amount of $100,000, which is held on trust to be applied against any monetary penalty that might be fixed by the court. After entering into the terms of settlement the respondents agreed to pay the applicant a further sum in lieu of the fund's tax liability. The precise amount of that tax liability has not yet been determined.

  13  The agreed statement of facts then contains the following "joint submissions" concerning the pecuniary penalty to be imposed:

   

 56.  The respondents have admitted that, by entering into the third agreement, they breached s 109 and s 62(1) of the SIS Act. They also admit that each of the above contraventions was a serious contravention of that Act, and they agree that declarations should be made to that effect, as is contemplated by s 196(2) of the SIS Act.

 57.  Each of s 62(1) and s 109(1) of the SIS Act are civil penalty provisions within the meaning of s 193 and Pt 21 of the SIS Act. As a consequence, the court can impose a pecuniary penalty for breach of those provisions in accordance with s 196 of the SIS Act.

 58.  The maximum penalty that can be awarded for a breach of a civil penalty provision is 2000 penalty units. A penalty unit is defined in s 4AA of the Crimes Act 1914 (Cth) as $110, making the maximum penalty for each breach $220,000.

 59.  As the respondents have admitted to 2 breaches of civil penalty provisions, the maximum penalty that could be imposed would be $440,000.

 60.  The parties have, however, agreed that a total pecuniary penalty order of $100,000 would be appropriate. They agreed on that figure by having regard to:

 (a)  The need for a substantial penalty in light of:

 (i)  the serious nature of the breaches, which involved a blatant disregard for the arm's length and sole purpose provisions of the SIS Act;

 (ii)  the importance of any order operating as a substantial;

 (iii)  the importance of any order operating as a substantial deterrent to the trustees of other employer-sponsored superannuation funds from applying the assets of a superannuation fund for purposes not permitted by s 62(1) of the SIS Act;

 (b)  Mitigating factors, including:

 (i)  the 2 agreed contraventions arise out of the same facts;

 (ii)  the $226,497.84 compensation that has already been paid by the respondents;

 (iii)  the agreement to make a further payment to the applicant in lieu of the outstanding tax liabilities of the fund.

 61.  The parties agreed that, having regard to the respective roles of the first and second respondents in the management and operation of the fund, Tunstall Bond and Sarkis Manufacturing, it would be appropriate that the pecuniary penalty order be made only against the first respondent. In particular, at all material times the second defendant assumed a passive role as trustee of the fund.

The statutory framework

  14  Section 196 of the SIS Act provides:

   

(1) This section applies if the Court is satisfied that a person has contravened a civil penalty provision, whether or not the contravention also constitutes an offence because of section 202.

 

Note: Section 220 provides that a certificate by a court that the court has declared a person to have contravened a civil penalty provision is conclusive evidence of the contravention.

 

(2) The Court is to declare that the person has, by a specified act or omission, contravened that provision in relation to a specified superannuation entity, but need not so declare if such a declaration is already in force under Division 4.

 

(3) The Court may also make against the person an order that the person pay to the Commonwealth a monetary penalty of an amount specified in the order that does not exceed 2,000 penalty units.

 

(4) The Court is not to make an order under subsection (3) unless it is satisfied that the contravention is a serious one.

 

(5) The Court is not to make an order under subsection (3) if it is satisfied that an Australian court has ordered the person to pay damages in the nature of punitive damages because of the act or omission constituting the contravention.

  15  It should be noted that both s 62(1) and s 109(1) are "civil penalty provisions" within the meaning of s 196(1): see ss 62(2) and 109(2), and note s 193. The effect of s 196(4) is that the court may not make a pecuniary penalty order in relation to a breach of a civil penalty provision unless the court is satisfied that the contravention is "serious".

  16  In substance, s 62(1) provides that the trustee of a regulated superannuation fund must comply with the "sole purpose" test set out in s 62. Essentially, that test requires that the trustee ensure that the fund is maintained solely for one or more specified "core purposes" (s 62(1)(a)). Alternatively, the fund must be maintained solely for one or more of the "core purposes" and for one or more of the specified "ancillary purposes" (s 62(1)(b)). The nominated benefits, the subject of these purposes, refer to the provision of "benefits" to or in respect of members of the fund, on or after certain events, such as retirement or death.

  17  Section 109(1) provides that the trustee or investment manager of a superannuation entity must not "invest" money of the entity unless:

 •  the trustee (or investment manager) and the other party to the relevant transaction are dealing with each other at arm's length; or

 •  the terms and conditions are similar to what they would be if the parties were dealing at arm's length.

  18  The term "at arm's length" is not defined in the SIS Act. Nonetheless, it plainly implies a dealing that is carried out on commercial terms. As counsel for the respondents submitted, a useful test to apply is whether a prudent person, acting with due regard to his or her own commercial interests, would have made such an investment.

Pecuniary penalty orders

  19  As the agreed statement of facts notes, the maximum penalty that can be imposed pursuant to s 196(3) for a contravention of a civil penalty provision is 2000 penalty units. A penalty unit is defined in s 4AA of the Crimes Act 1914 (Cth) as $110. That makes the maximum penalty for each breach, in the present case, $220,000. As the respondents have admitted to 2 such breaches, the maximum possible penalty in this case is $440,000.

  20  There is a joint submission concerning pecuniary penalty before the court. The parties have agreed that a total monetary penalty of $100,000, against the first respondent, would be an appropriate disposition in his case. They have also agreed that the conduct of the second respondent was far less culpable than that of her husband, and that no monetary penalty is warranted so far as she is concerned.

  21  The figure put forward by the parties in the joint submission is not, of course, binding upon the court. In Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] ATPR ¶41-993 at [70], Branson, Sackville and Gyles JJ said that:

   

The court must form its own view about the appropriate range of penalties, on the basis of the agreed facts or evidence.

  22  However, the authorities indicate that the court should not depart from a penalty agreed between the parties if the penalty is within the "permissible range". In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 291; 141 ALR 640 at 644, Burchett and Kiefel JJ said:

   

A proper figure is one within the permissible range in all the circumstances. The court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case.

  23  Similarly, in Australian Securities and Investment Commission v Vizard [2005] FCA 1037, Finkelstein J observed (at [45]) that the authorities:

   

… hold that I should not depart from the penalty recommended by the parties unless it is clearly out of bounds.

  24  In Australian Competition & Consumer Commission v Colgate-Palmolive Pty Ltd [2002] ATPR ¶41-880, I followed the reasoning of Burchett and Kiefel JJ in NW Frozen Foods, as I was bound to do. It is fair to say that I did so somewhat reluctantly. Other judges at first instance had expressed similar reservations. In Mobil Oil, the full court clarified the position to some degree by emphasising that NW Frozen Foods did not require the court to fix the penalty proposed by the parties. However, it was acknowledged that there was a public interest in promoting settlement of litigation, and thus in encouraging parties to reach agreed penalties. In that context, the views of the particular regulator were a relevant, though not determinative, consideration. Nonetheless, such criticisms as had been made of the reasoning NW Frozen Foods did not warrant the reconsideration of the principles stated in that case.

  25  With great respect to those who think differently, I remain of the view that the approach taken in NW Frozen Foods is misconceived, and contrary to principle. As I have previously said, it endorses the "somewhat undesirable practice" of the particular regulator presenting to a court an agreed pecuniary penalty, which it will normally simply "rubber stamp". Platitudes such as those adopted in Mobil Oil, which allow for some latitude on the part of a court, but only in circumstances where the figure agreed upon is "clearly out of bounds", impose an unwarranted constraint upon the broad discretion that the legislature has vested in judges charged with the task of imposing proper penalties. The prospect that a judge will depart from an agreed penalty, given the criteria that must be satisfied before he or she will do so, is likely to be more apparent than real.

  26  It must be remembered that the imposition of a civil penalty for a statutory contravention is intended to achieve many of the same objectives as the fixing of a fine for a criminal offence. These include deterrence, both specific and general, denunciation, and, importantly, punishment. The only difference of any consequence is that there may be an element of additional stigma associated with a criminal conviction.

  27  It is a truism that sentencing is often a complex and difficult task. It has been described as an art, and not a science. There is no one correct penalty in any given case. In criminal cases, it is regarded as quite wrong, and unacceptable for the prosecution and the defence to present the judge with an agreed sentence, stated in terms of the exact amount of time to be served, or the precise amount of any fine to be levied. There is no reason why the principle should be any different in civil cases. If the parties are agreed upon an exact amount that should be fixed as a civil penalty, that submission should be treated no differently to any other submission. In particular, it should not be regarded as presumptively one that the court must adopt, unless it is outside the "permissible range". No criminal court would ever contemplate the fettering of a sentencing discretion in that way. Nor should a court exercising civil jurisdiction.

  28  Despite my strongly held views on this subject, I am bound to follow both the NW Frozen Foods and Mobil Oil decisions. Accordingly, I must ask myself whether the agreed penalties in this case, of $100,000 for the first respondent, and nothing for the second respondent, are within "the permissible range" for the serious breaches of the SIS Act that have been admitted.

  29  There has been little judicial consideration of the imposition of pecuniary penalty orders in the context of this Act. There is only one reported case involving a pecuniary penalty order. In Australian Prudential Regulation Authority v Holloway (2000) 45 ATR 278; 35 ACSR 276, Mansfield J made orders that the corporate respondent and the individual respondent pay to the Commonwealth monetary penalties of $222,000 and $35,000 respectively. This was after he had found that they had engaged in multiple breaches of s 85 of the SIS Act, which concerned artificial reductions in the value of in-house assets. It is significant to note that these penalties were imposed even though there was no suggestion, in that case, that the relevant funds had suffered any loss.

  30  It is of course proper to have regard to the principles that govern pecuniary penalties under other statutes. In Trade Practices Commission v CSR Ltd [1991] ATPR ¶41-076, French J identified a number of factors that were relevant when considering appropriate penalties for infringements of Pt IV of the Trade Practices Act 1974 (Cth). His Honour distilled these factors from earlier decided cases. They include: the nature and extent of the contravening conduct; the amount of loss or damage caused, if any; the circumstances in which the conduct took place; the size of the contravening company; the deliberateness of the contravention, and the period over which it extended; whether the contravention arose out of the conduct of senior management; the company's corporate culture; and whether the company had co-operated with the authorities in relation to the contravention. To these factors may be added the respondent's past record, the respondent's financial position, and the deterrent effect of any civil penalty imposed.

  31  Both the applicant and the respondents submitted that the agreed penalty of $100,000 for the first respondent was "within the permissible range". They pointed out that although the maximum penalty for the 2 contraventions, viewed separately, was $440,000, in practical terms the 2 offences ought to be viewed as essentially involving a single course of conduct. Both offences arose out of the precisely the same facts and circumstances. In essence, ss 62(1) and 109(1) are simply different ways of characterising the same misbehaviour. It is a well-recognised principle of sentencing that a person not be punished twice for what is, in substance, the same conduct, even if that conduct can be viewed as giving rise to 2 separate offences. Accordingly, it was submitted, that as a practical matter, the maximum penalty for these 2 contraventions should be regarded as $220,000. I accept that submission.

  32  The question then is what weight should be given to the various aggravating and mitigating circumstances.

  33  There was evidence before me from the second respondent as to her personal background, and that of the first respondent, her husband. It is unnecessary for me to summarise it in any detail. It is sufficient to say that the second respondent had limited business experience, and little involvement in the admitted contraventions. She became a trustee of the fund in around May 1998. She had no real idea of what that entailed. Basically she did whatever her husband told her to do.

  34  The first respondent was in a different position. He had a good deal of experience in running a jewellery manufacturing business, and was centrally involved in what occurred. He was at one time a director of Tunstall Bond. Apart from a drink driving conviction, he had no criminal record. It was common ground that his conduct was far more culpable, in this matter, than that of his wife.

  35  According to the second respondent, she and her husband had already been required to pay $226,497.08 as part of the settlement with the applicant. That included compensation to the members of the fund, other than the respondents, in the sum of $151,497.84, winding up costs of $55,000, and $20,000 in accounting and auditing fees. In addition, they had paid $100,000 on account of civil penalties sought by the applicant, $70,000 on account of the fund's taxation liabilities, and $18,000 on account of the applicant's costs of the proceeding. That made a total of $404,500. In addition, they had incurred legal costs of their own in the order of $70,000 to $100,000. Thus, on any view, the proceeding had already cost them, or would cost them, of the order of $500,000.

  36  The second respondent said that in order to fund the settlement with the applicant, and meet their own legal costs, she and her husband had substantially increased their level of borrowings. They had lost a good proportion of the wealth they had accumulated over the past 20 years. She said that their net asset position, at present, after settlement with the applicant was approximately $370,000. Their combined annual income was just over $100,000. It was likely that they would have to sell some assets to reduce their debts to a more manageable level.

  37  Finally, the second respondent said that she and her husband both accepted responsibility for the admitted contraventions. She claimed that they had always intended to meet their obligations, but that they had not taken the steps necessary to understand what those obligations were in the context of superannuation. Finally, she expressed contrition, on behalf of herself and her husband. She said that they had learnt their lesson and that their conduct would not be repeated.

  38  In addition, I note that the respondents have relinquished their combined interest in the fund in the sum of about $108,000.

  39  On the other hand, as counsel for the applicant submitted, the contravening conduct involved a blatant disregard of both the "arm's length" and "sole purpose" provisions of the SIS Act. Those contraventions had the effect of depriving the fund of a substantial amount of money, as they allowed the respondents to retain and use for their own purposes money that should have remained in the fund for the benefit of its members. The contraventions were deliberate. Despite counsel's submission that there was no evidence that the market-value of the dies as at 30 June 1999 was not in the order of $165,000, I am satisfied that the true value of the dies was far less than the amount that the fund paid for them. The agreed statement of facts make that plain, and counsel's attempt to persuade me that no such finding should be made has fallen on barren ground.

  40  I am prepared to accept that the payment of $151,497.84 made by the respondents represents a substantial payment made in restitution of whatever loss has been sustained by the fund, or by the Commonwealth in reimbursing the fund. I do not accept the contention, at one stage made, and then withdrawn, that there is no proven loss.

  41  In Holloway, Mansfield J said of the SIS Act (at ATR 281 [10]; ACSR 276 [10]):

   

The object of the Act is to make provision for the prudent management, inter alia, of regulated superannuation funds. Submission by a superannuation fund to be a regulated superannuation fund under the Act carries with it eligibility for concessional taxation treatment. Each of the relevant superannuation funds by their trustees elected to become regulated superannuation funds under s 19 of the SIS Act. Part 8 of the SIS Act sets out rules about the level of in-house assets of regulated superannuation funds. Its intent is clearly to ensure that the investments of a regulated superannuation fund should not be exposed to the vagaries of the business of the employer-sponsor as it restricts the extent of the investment permitted into the employer-sponsor. It is clearly an integral element of the regulatory scheme.

  42  In my view, each respondent contravened the SIS Act in a way that should be characterised as "serious", within the meaning of s 196(2). The first respondent was the driving force behind the fund's investments. His conduct was, as has been indicated, far worse than that of his wife. He cannot avoid responsibility for his actions by attributing blame to others, including those who provided legal services, and proffered accounting advice to the fund. While I accept that his conduct may fall short of actual dishonesty, it still involved a blatant and conscious disregard of his obligations as a trustee. It warrants strong condemnation. The second respondent, though far less culpable than her husband, had a duty, as a trustee of the fund, to ensure that any investments were properly made. She failed in that duty.

  43  Weighing all of these considerations, I am not persuaded that the agreed penalty of $100,000 for the first respondent's contraventions of the SIS Act falls outside "the permissible range". I am also not persuaded that the agreement between the parties that the second respondent should not pay any penalty falls outside that range. Indeed, I think that it would be inappropriate to fix a civil penalty in her case.

  44  That does not mean that I would have chosen a penalty of $100,000 for the first respondent had the matter been left purely within my discretion. I may well have selected a higher figure. The fact is that the reasoning in NW Frozen Foods imposes a significant constraint upon my choice.

  45  I will make declarations and orders accordingly. The applicant did not seek an order for the costs of this hearing. As such, there will be no order as to costs.