FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission v Pattenden (Liability and Penalty – Pattenden) [2026] FCA 1616

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 1317G(1) of the Corporations Act 2001 (Cth) (Corporations Act), within 90 days of this order, the first defendant pay to the Commonwealth a pecuniary penalty of $250,000 for contraventions of ss 180(1), 181(1) and 182(1) of the Corporations Act relating to Aboriginal Community Benefit Fund No 2 Pty Ltd (ACBF 2), ACBF Funeral Plans Pty Ltd (ACBF Plans) and Community Funeral Plans Pty Ltd (ACBF Community).

2.    Pursuant to s 206C(1)(a)(i) and/or s 206E(1)(a)(ii) of the Corporations Act the first defendant is disqualified from managing corporations for 15 years.

3.    The first defendant pay a contribution of $50,000 to the plaintiff’s costs of and incidental to the proceeding.

THE COURT DECLARES THAT:

4.    Under s 1317E(1) of the Corporations Act that, in his capacity as a director of ACBF 2, between 4 September 2017 and 30 November 2018, the first defendant:

(a)    failed to consider properly or at all the effect of the Crown Insurance Services Limited (Crown) arrangements on the financial position of ACBF 2;

(b)    failed to consider properly or at all whether continuing the policy with Crown was in the best interests of ACBF 2 and its fund members;

(c)    failed to consider properly or at all whether there were alternative options available to ACBF 2 that would have been in the best interests of ACBF 2 and its fund members;

(d)    failed to pursue properly or at all any alternative options available to ACBF 2;

(e)    preferred his, the second defendant’s and Crown’s financial interests in causing ACBF 2 to maintain its Crown arrangements;

(f)    preferred his, the second defendant’s and Crown’s financial interests in causing or allowing ACBF 2 to accept or agree to pay the increased premium, payment of which occurred on 15 occasions between 4 September 2017 and 30 November 2018; and

(g)    failed to ensure properly or at all that ACBF 2, as trustee for the funeral fund operated by it (Fund 2), took all necessary and reasonable steps to protect the Fund (contrary to cl 13.9 of Fund 2’s trust deed),

and by reason of the above:

(h)    failed to discharge his duties to ACBF 2 with the degree of care and diligence that a reasonable person would exercise, if they were a director or officer of a corporation in ACBF 2’s circumstances, and occupied the offices held by the first defendant, and had the same responsibilities within the corporation; and

(i)    as a result, breached s 180(1) of the Corporations Act.

5.    Under s 1317E(1) of the Corporations Act that, in his capacity as a director of ACBF, between 4 September 2017 and 30 November 2018:

(a)    the first defendant:

(i)    had a material personal interest in the Crown policy held by ACBF 2;

(ii)    caused ACBF 2 to maintain the arrangements with Crown without taking any or all necessary steps to consider and pursue the alternative options available to ACBF 2;

(iii)    caused ACBF 2 to pay an increase in premium of 100% without taking any or all necessary steps to consider and pursue the alternative options available to ACBF 2; and

(iv)    failed to take all necessary steps to manage the conflict of interest that arose between his and the second defendant’s duties to ACBF 2 and his and the second defendant’s interest in Crown;

(v)    used his position as a director or officer of ACBF 2 to:

A.    obtain an advantage for Crown and ultimately himself and the second defendant; and

B.    cause a detriment to ACBF 2,

(b)    the first defendant’s conduct referred to in 5(a) above:

(i)    was not in good faith in the best interests of ACBF 2;

(ii)    was done for the improper purpose of gaining an advantage for Crown and ultimately himself and the second defendant; and

(iii)    resulted in the first defendant:

A.    gaining an advantage for Crown and ultimately himself and the second defendant; and

B.    causing detriment to ACBF 2,

(c)    by reason of the circumstances in 5(a) and (b) above, the first defendant:

(i)    failed to exercise his powers and discharge his duties in good faith in the best interests of any of ACBF 2 and for a proper purpose, and as a result contravened s 181(1) of the Corporations Act; and

(ii)    used his position contrary to and in contravention of s 182(1) of the Corporations Act.

6.    Under s 1317E(1) of the Corporations Act that, in his capacity as a director of ACBF Plans between 4 September 2017 and 30 November 2018, the first defendant:

(a)    failed to consider properly or at all the effect of the Crown arrangements on the financial position of ACBF Plans;

(b)    failed to consider properly or at all whether continuing the policy with Crown was in the best interests of ACBF Plans and its fund members;

(c)    failed to consider properly or at all whether there were alternative options to available to ACBF Plans that would have been in the best interests of ACBF Plans and its fund members;

(d)    failed to pursue properly or at all any alternative options available to ACBF Plans;

(e)    preferred his, the second defendant’s and Crown’s financial interests in causing ACBF Plans to maintain its Crown arrangements;

and by reason of the above:

(f)    failed to discharge his duties to ACBF Plans with the degree of care and diligence that a reasonable person would exercise, if they were a director or officer of a corporation in ACBF Plans’ circumstances, and occupied the offices held by the first defendant, and had the same responsibilities within the corporation; and

(g)    as a result, breached s 180(1) of the Corporations Act.

7.    Under s 1317E(1) of the Corporations Act that, in his capacity as a director of ACBF Plans, between 4 September 2017 and 30 November 2018:

(a)    the first defendant:

(i)    had a material personal interest in the Crown policy held by ACBF Plans;

(ii)    caused ACBF Plans to maintain the arrangements with Crown without taking any or all necessary steps to consider and pursue the alternative options available to ACBF Plans;

(iii)    failed to take all necessary steps to manage the conflict of interest that arose between his and the second defendant’s duties to ACBF Plans and his and the second defendant’s interest in Crown;

(iv)    used his position as a director or officer of ACBF Plans to:

A.    obtain an advantage for Crown and ultimately himself and the second defendant; and

B.    cause a detriment to ACBF Plans,

(b)    the first defendant’s conduct referred to in 7(a) above:

(i)    was not in good faith in the best interests of ACBF Plans;

(ii)    was done for the improper purpose of gaining an advantage for Crown and ultimately himself and the second defendant; and

(iii)    resulted in the first defendant:

A.    gaining an advantage for Crown and ultimately himself and the second defendant; and

B.    causing detriment to ACBF Plans,

(c)    by reason of the circumstances in 7(a) and (b) above, the first defendant:

(i)    failed to exercise his powers and discharge his duties in good faith in the best interests of any of ACBF Plans and for a proper purpose, and as a result contravened s 181(1) of the Corporations Act; and

(ii)    used his position contrary to and in contravention of s 182(1) of the Corporations Act.

8.    Under s 1317E(1) of the Corporations Act that, in his capacity as a director of ACBF Community between 4 September 2017 and 30 November 2018, the first defendant:

(a)    failed to consider properly or at all the effect of the Crown arrangements on the financial position of ACBF Community;

(b)    failed to consider properly or at all whether continuing the policy with Crown was in the best interests of ACBF Community and its fund members;

(c)    failed to consider properly or at all whether there were alternative options available to ACBF Community that would have been in the best interests of ACBF Community and its fund members;

(d)    failed to pursue properly or at all any alternative options available to ACBF Community;

(e)    preferred his, the second defendant’s and Crown’s financial interests in causing ACBF Community to maintain its Crown arrangements;

and by reason of the above:

(f)    failed to discharge his duties to ACBF Community with the degree of care and diligence that a reasonable person would exercise, if they were a director or officer of a corporation in ACBF Community’s circumstances, and occupied the offices held by the first defendant, and had the same responsibilities within the corporation; and

(g)    as a result, breached s 180(1) of the Corporations Act.

9.    Under s 1317E(1) of the Corporations Act that, in his capacity as a director of ACBF Community, between 4 September 2017 and 30 November 2018:

(a)    the first defendant:

(i)    had a material personal interest in the Crown policy held by ACBF Community;

(ii)    caused ACBF Community to maintain the arrangements with Crown without taking any or all necessary steps to consider and pursue the alternative options available to ACBF Community;

(iii)    failed to take all necessary steps to manage the conflict of interest that arose between his and the second defendant’s duties to ACBF Community and his and the second defendant’s interest in Crown;

(iv)    used his position as a director or officer of ACBF Community to:

A.    obtain an advantage for Crown and ultimately himself and the second defendant; and

B.    cause a detriment to ACBF Community,

(b)    the first defendant’s conduct referred to in 9(a) above:

(i)    was not in good faith in the best interests of ACBF Community;

(ii)    was done for the improper purpose of gaining an advantage for Crown and ultimately himself and the second defendant; and

(iii)    resulted in the first defendant:

A.    gaining an advantage for Crown and ultimately himself and the second defendant; and

B.    causing detriment to ACBF Community,

(c)    by reason of the circumstances in 9(a) and (b) above, the first defendant:

(i)    failed to exercise his powers and discharge his duties in good faith in the best interests of any of ACBF Community and for a proper purpose, and

(ii)    as a result contravened s 181(1) of the Corporations Act; and

(iii)    used his position contrary to and in contravention of s 182(1) of the Corporations Act.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

KENNETT J:

Introduction

1    By its originating process filed on 30 August 2023 the plaintiff (ASIC) seeks declarations, the imposition of pecuniary penalties, and disqualification orders under (respectively) s 1317E(1), s 1317G(1) and s 206C(1)(a)(i) and/or s 206E(1)(a)(ii) of the Corporations Act 2001 (Cth) (the Corporations Act) against each of the five defendants. These remedies are sought for contraventions of ss 180(1), 181(1) and 182(1) of the Corporations Act.

2    ASIC reached agreements on liability and relief with the first defendant (Mr Pattenden), the second defendant (Mr Law), the third defendant (Mr Wilson) and the fifth defendant (Mr Clayton). No agreement was reached between ASIC and the fourth defendant (Mr Jones). These reasons deal with the issues of liability and relief in respect of Mr Pattenden, which were the subject of joint submissions and a short hearing on 23 April 2026.

3    The submissions proceeded from a statement of agreed facts and admissions (SAFA) dated 19 December 2025. The SAFA is lengthy and does not need to be discussed in detail in order to articulate my reasons for the orders that will be made. However, where pecuniary penalties are imposed, there is virtue in members of the public being able to know in some detail what was the conduct that attracted the penalties. The full text of the SAFA is therefore annexed to these reasons.

4    I have also annexed the parties’ joint written submissions (the submissions). Those submissions summarise the factual background accurately and in some detail and I am content to adopt that summary rather than repeat the exercise.

5    The parties jointly proposed the making of the following orders:

(a)    six declarations under s 1317E(1) recording, in respect of three different entities, contraventions by Mr Pattenden of:

(i)    s 180(1);

(ii)    s 181(1) and

(iii)    s 182(1) of the Corporations Act;

(b)    an order under s 1317G(1) requiring payment of a pecuniary penalty of $250,000;

(c)    an order under s 206C(1)(a)(i) and/or s 206E(1)(a)(ii) disqualifying Mr Pattenden from managing corporations for 15 years; and

(d)    an order that Mr Pattenden pay a contribution of $50,000 towards ASIC’s costs of and incidental to the proceeding.

6    For the reasons set out below, I am satisfied that the orders proposed by the parties should be made.

Contraventions of the Corporations Act

7    The issues in the proceeding concern the period from 4 September 2017 to 30 November 2018 (the relevant period). During the relevant period, Mr Pattenden was a director of the companies referred to as ACBF 2, ACBF Plans and ACBF Community (together the ACBF Entities). The ACBF Entities operated funeral funds (the Funds) which were marketed mostly to Indigenous communities. They operated as part of a single business (the ACBF business). Mr Pattenden was the founder of the ACBF business and, together with Mr Law, held a majority interest in its ultimate holding company.

8    Each of the ACBF Entities was required by its trust deed or plan rules to insure the lives of members. Each maintained an insurance policy with Crown Insurance Services Limited (Crown). Under those policies Crown was entitled to change the rates at which premiums were calculated on three months’ written notice. Mr Pattenden and Mr Law were also the ultimate owners of the shares in Crown.

9    On 4 September 2017, Crown doubled the monthly premiums payable by ACBF 2’s fund (Fund 2). That had a significant negative impact on ACBF 2. It also demonstrated that ACBF Plans and ACBF Community were vulnerable to price increases by Crown. There were various steps that the directors of the ACBF Entities could have considered taking in order to protect the Funds and their members against increases in the insurance premiums payable to Crown. No such steps were considered within the relevant period.

10    Mr Pattenden admits that, during the relevant period, in contravention of s 180(1) of the Corporations Act 2001 (Cth) (the Corporations Act):

(a)    he failed to consider the effect of the Crown insurance policies on the financial position of the Funds, to consider whether the Crown policies were in the best interests of members of the Funds and to consider or pursue alternatives to the insurance arrangements with Crown (including whether to renegotiate or cancel the policy and find a new insurer, or wind up the Funds); and

(b)    he preferred his, Crown’s and Mr Law’s interests in causing the ACBF Entities to maintain the Crown policies and causing or allowing ACBF 2 to accept or agree to pay the increased premium and failed to ensure that ACBF 2, as trustee of Fund 2, took all necessary and reasonable steps to protect the fund contrary to the trust deed.

11    Mr Pattenden also admits that, during the relevant period, in contravention of ss 181(1) and 182(1) of the Corporations Act, he failed to take all necessary steps to manage the conflict of interest that arose between his and Mr Law’s duties to the ACBF Entities and their interest in Crown, used his position as an officer of the ACBF Entities to obtain an advantage for Crown (and ultimately himself and Mr Law), and caused detriment to the ACBF Entities.

12    These contraventions are clearly established on the facts set out in the SAFA, for the reasons explained in the joint submissions.

Declarations

13    Subsections 180(1), 181(1) and 182(1) are defined as “civil penalty provisions” by s 1317E(3) of the Corporations Act. Section 1317E(1) requires the Court to make a declaration of contravention if it is satisfied that a person has contravened a civil penalty provision. Pursuant to s 1317E(2), a declaration of contravention must specify:

(a)    the Court that made the declaration;

(b)    the civil penalty provision that was contravened;

(c)    the person who contravened the provision;

(d)    the conduct that constituted the contravention;

(e)    if the contravention is of a corporation/scheme civil penalty provision—the corporation or registered scheme to which the conduct related

14    Section 1317E during the relevant period was relevantly to the same effect as it is now, although the list of civil penalty provisions was then contained in subsection (1).

15    In the light of my acceptance that Mr Pattenden contravened ss 180(1), 181(1) and 182(1) in the ways described in the joint submissions, declarations will be made in the form proposed by the parties.

Disqualification orders

Relevant provisions

16    Where a declaration is made under s 1317E that a person contravened a “corporation/scheme civil penalty provision” (which includes ss 180(1), 181(1) and 182(1)), s 206C(1) of the Corporations Act empowers the Court (on the application of ASIC) to make an order disqualifying the person from managing corporations for a period that the Court considers appropriate. The only other criterion for making such an order is that the Court is “satisfied that the disqualification is justified”. For the purpose of determining whether a disqualification is justified, the Court is authorised by s 206C(2) to have regard to:

(a)    the person’s conduct in relation to the management, business or property of any corporation; and

(b)    any other matters that the Court considers appropriate.

17    Section 206E confers an identical power on the Court where (relevantly here) the person “has at least twice contravened this Act … while they were an officer of the body corporate” (s 206E(1)(a)(ii)) and the Court is satisfied that the disqualification is justified. Section 206E does not require a declaration of contravention to have been made. If necessary, I would find that Mr Pattenden contravened the Corporations Act at least twice during the relevant period on the basis that he failed to comply with his duties as a director in respect of each of the ACBF Entities and that s 206E is therefore engaged. However, it is not necessary to express a concluded view on that issue because s 206C clearly is engaged.

Approach

18    In Australian Securities and Investments Commission v iSignthis Limited (Penalty) [2025] FCA 917 at [13]-[26] (iSignthis), McEvoy J reviewed the authorities dealing with disqualification orders and identified the following principles.

(a)    The Court has an established practice of considering the period of disqualification before considering whether any pecuniary penalty should be awarded, or the amount of that penalty. In an appropriate case, the Court may make a pecuniary penalty order in addition to a disqualification order.

(b)    While the primary purpose of a pecuniary penalty order is to act as a specific and general deterrent against repetition of like conduct, the primary aim of disqualification orders is the protection of the public from the harmful use of the corporate structure, or from use that is contrary to proper commercial standards. Protection of the public extends to protection of individuals who deal with companies. However, disqualification must not be excessive and no one should be “sacrificed to the public interest” (Australian Securities and Investments Commission v Beekink [2007] FCAFC 7 at [113] (Mansfield, Jacobson and Siopis JJ), quoting Australian Securities and Investments Commission v Rich [2003] NSWSC 186 at [26] (Bryson J)).

(c)    It is the different purposes of disqualification orders and pecuniary penalty orders that justify the practice of considering the imposition of a pecuniary penalty only after a disqualification order is considered.

(d)    The length of the period of disqualification and the seriousness of the contraventions in question are correlative. Consideration is therefore to be given to the seriousness of the contraventions, the propensity that the defendant may have to engage in similar conduct in the future, and the harm that may be caused to the public. Longer periods of disqualification are reserved for cases where contraventions have been of a serious nature, such as those involving dishonesty and large financial losses.

(e)    The factors identified in the authorities as relevant to an assessment of the length of a period of disqualification include:

(i)    whether the conduct was inadvertent or deliberate;

(ii)    whether the conduct was “continued, knowing and wilful” (Australian Securities and Investments Commission v Healey (No 2) [2011] FCA 1003; 196 FCR 430 at [105] (Middleton J));

(iii)    whether the director acted dishonestly or in a way that would mislead or deceive;

(iv)    whether the director has expressed any contrition or remorse;

(v)    the experience and age of the director;

(vi)    the relevance of the contraventions to the company’s business; and

(vii)    the consequences of the contraventions committed by the director.

(f)    Previous cases provide only general guidance for determining a penalty or length of disqualification.

(g)    Cooperation with ASIC may be a mitigating factor where it involves contrition, or a willingness to accept responsibility and facilitate the course of justice. It may also be a factor (but likely to a lesser degree) where it has spared the community the expense of a contested trial and enabled the resources of the regulator to be allocated to other investigations.

(h)    The criminal law principles of totality, course of conduct and parity inform the Court’s consideration of disqualification. When determining the disqualification period to be imposed for multiple contraventions, the Court should impose a disqualification period for each individual contravention and then take into account the totality principle to arrive at a total effective disqualification.

19    The principles that govern the Court’s approach when the parties agree on the appropriate relief (discussed below in connection with pecuniary penalties) also apply when there is an agreed position on other forms of relief such as disqualification: Australian Securities and Investments Commission v Hawkins [2025] FCA 121 at [3] (Stewart J) and Annexure A [140].

Application

20    The parties jointly propose an order disqualifying Mr Pattenden from managing corporations for a period of 15 years. For the reasons set out in the joint submissions at [137] to [159], I am satisfied that such an order is appropriate. In particular:

(a)    Mr Pattenden had been responsible for establishing Crown and constructing the relationship between Crown and the ACBF Entities, which over a period of at least 15 years conferred financial benefits on him and put the ACBF Entities in a position where two of their directors had a clear and ongoing conflict of interest.

(b)    Mr Pattenden knew or ought to have known that the premium increase would be very damaging to the interests of ACBF 2 and that the other ACBF Entities were vulnerable to price increases by Crown. Mr Pattenden admits that he did not consider properly or at all the effect of the Crown arrangements on the financial position of the ACBF Entities or whether continuing to insure with Crown was in the best interests of the Entities and fund members.

(c)    Mr Pattenden is now in his late seventies. During the relevant period he was an experienced director. He had been a director of one or more of the ACBF Entities since 1992 and had been effectively the Chief Executive Officer or Managing Director of the ACBF business since at least 2002.

(d)    The premium increase created a substantial risk that ACBF 2 would become insolvent within about four years, leaving fund members without cover and unable to recover cancellation benefits. Had a similar premium increase been imposed on ACBF Plans or ACBF Community, that entity would have become insolvent (leaving its members without cover).

(e)    Mr Pattenden, through his interest in Crown, derived a financial benefit from the ACBF Entities continuing to pay premiums to Crown.

(f)    In these circumstances considerations of general and specific deterrence call for a significant period of disqualification. Because Mr Pattenden was the ultimate decision-maker in the ACBF business during the relevant period, the principle of parity suggests that he should face more severe orders than the other defendants.

(g)    Mr Pattenden has admitted the contraventions and accepted responsibility for them through the SAFA. That has avoided the cost to the public of a contested hearing which would have run for around three weeks.

(h)    There are nine separate contraventions involving three courses of conduct (one for each entity), but they arose from the same underlying circumstances and were in essence the same.

Pecuniary penalties

The applicable provision

21    Where a declaration of contravention of a corporation/scheme civil penalty is made, s 1317G(1)(b) of the Corporations Act empowers the Court to order the person identified in the declaration to pay a pecuniary penalty to the Commonwealth if the contravention:

(i)    materially prejudices the interests of the corporation or scheme, or its members; or

(ii)    materially prejudices the corporation’s ability to pay its creditors; or

(iii)    is serious.

22    The parties submit that these conditions are satisfied and I agree.

23    During the relevant period s 1317G(1) provided for a maximum penalty of $200,000 for an individual, apparently in respect of each identified contravention (s 1317G(1B)(a)). The joint submissions proceed on the basis that this is the applicable upper limit. I accept that this is the correct approach, notwithstanding that s 1317G has since been amended to make the maximum penalty for an individual the greater of 5,000 penalty units or three times the benefit derived or detriment avoided from the contravention, in the light of s 7(2)(c) and (d) of the Acts Interpretation Act 1901 (Cth) and the stringency with which the presumption against retrospectivity is applied to “penal” statutes (including statutes imposing civil penalties) (see Director of Public Prosecutions (Cth) v Keating [2013] HCA 20; 248 CLR 459 at [48] (French CJ, Hayne, Crennan, Kiefel, Bell and Keane JJ) and Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73; 262 FCR 243 at [67]-[68] (Allsop CJ, Middleton and Robertson JJ)).

The approach to assessment of penalties

24    The joint submissions at [128] to [136] distil seven propositions from the authorities, which I agree provide appropriate guidance to the exercise of the discretion conferred by s 1317G.

(a)    The Court’s discretion to impose a penalty must be exercised judicially; that is, fairly and reasonably having regard to the subject matter, scope and purpose of the legislation.

(b)    The purpose of civil penalties is “primarily, if not solely, the promotion of the public interest in compliance with the provisions of the Act by the deterrence of further contraventions of the Act” (Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 274 CLR 450 at [9] (Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ)).

(c)    The penalty must be “proportionate” and “appropriate” in the sense that it strikes a reasonable balance between oppressive severity and deterrence in the circumstances of the case. The Court’s task is to identify and balance all of the relevant factors and make a value judgment as to the appropriate penalty, a process described as an intuitive or “instinctive synthesis” (iSignthis at [36]).

(d)    The Court should have regard to the prescribed maximum penalty and there should be some reasonable relationship between the maximum penalty and that imposed.

(e)    In determining the pecuniary penalty, the Court must take into account all relevant matters. These can include things that occur prior to the period in which the contraventions occurred.

(f)    Additional factors may be taken into account as relevant considerations, insofar as they inform the penalty necessary to secure the objects of deterrence. However, not all factors identified in previous cases will necessarily be relevant or important in every case. Factors identified as potentially relevant should not be applied as a “rigid catalogue” (iSignthis at [35]).

(g)    Criminal law principles of totality, course of conduct and parity also inform the Court’s determination of penalty.

(i)    Where there is a sufficient interrelationship in the legal and factual elements of the acts or omissions constituting the contravening conduct, the Court may, in its discretion, penalise the acts or omissions as a single course of conduct.

(ii)    The Court may consider the entirety of the underlying contravening conduct to determine whether the “total” or aggregate penalty is just and appropriate.

(iii)    Parity of penalty will be an important consideration where there are several defendants involved in the same events. Where other things are equal, persons concerned in the same contravention should receive the same punishment; and where other things are not equal, a due discrimination should be made. Where different penalties are imposed on defendants involved in the same contraventions, there must be a persuasive rationale for doing so.

Agreed penalties

25    Recently, in Australian Securities and Investments Commission v FIIG Securities Limited [2026] FCA 92, Derrington J said at [55]-[58] (FIIG):

The parties seek, by agreement, both declarations and orders imposing pecuniary penalties in respect of FIIG’s various contraventions of the Act. It is now well accepted that courts should not be reluctant to act upon agreements reached by regulators and those whom they regulate, as to the occasion of a relevant statutory contravention and the quantum of any penalty that should be imposed: Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482, 503-508 [46]-[61] (Commonwealth v Director, Fair Work Building Industry Inspectorate); see also NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285, 291; Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR¶41,993, 48,626 [51]; Clean Energy Regulator v E Connect Solar & Electrical Pty Ltd (2023) 171 ACSR 216, 234 - 237 [33] - [40].

In Commonwealth v Director, Fair Work Building Industry Inspectorate at 503-504 [46], the joint judgment of French CJ, Kiefel, Bell, Nettle and Gordon JJ emphasised that there is:

… an important public policy involved in promoting predictability of outcome in civil penalty proceedings … which … assists in avoiding lengthy and complex litigation and thus tends to free the courts to deal with other matters and to free investigating officers to turn to other areas of investigation that await their attention.

Subsequently, their Honours went on to observe, at 507 [58]:

Subject to the court being sufficiently persuaded of the accuracy of the parties' agreement as to facts and consequences, and that the penalty which the parties propose is an appropriate remedy in the circumstances thus revealed, it is consistent with principle and … highly desirable in practice for the court to accept the parties’ proposal and therefore impose the proposed penalty.”

(Emphasis in original).

This principle is not confined to submissions on penalties, but applies equally to all forms of relief: Lanterne [102] - [103]. It should thus be followed in the present case when evaluating the agreed position between ASIC and FIIG.

(Emphasis in original.)

26    On the issue of an appropriate penalty, the Full Court (Wigney, Beach and O’Bryan JJ) said in Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission [2021] FCAFC 49; 284 FCR 24 at [127] (Volkswagen):

Third, in considering whether the agreed and jointly proposed penalty is an appropriate penalty, it is necessary to bear in mind that there is no single appropriate penalty. Rather, there is a permissible range of penalties within which no particular figure can necessarily be said to be more appropriate than another. The permissible range is determined by all the relevant facts and consequences of the contravention and the contravener’s circumstances. An agreed and jointly proposed penalty may be considered to be “an” appropriate penalty if it falls within that permissible range: NW Frozen Foods at 290-291; Mobil Oil at 48,625-48,626; [47], [51]. It is unlikely to be considered an appropriate penalty if it falls outside that range.

(Emphasis in original.)

Application

27    The joint submissions at [137] to [159], to which I have already referred above, are also directed to the appropriateness of the proposed pecuniary penalty of $250,000. I have taken into account the factors discussed in those paragraphs.

28    Having engaged in contraventions of ss 180(1), 181(1) and 182(1) of the Corporations Act identified in six separate declarations, Mr Pattenden is liable to a maximum penalty of $1.8 million. The contraventions were serious and involved Mr Pattenden preferring his own interests to those of the companies of which he was a director. They were engaged in in circumstances where Mr Pattenden:

(a)    was an experienced director;

(b)    had created a structure in which, for many years, the ACBF Entities were contractually bound to an insurer in which Mr Pattenden himself had a substantial interest; and

(c)    was the founder of the ACBF business and its most senior director during the relevant period.

29    Against this, however:

(a)    the contraventions, while spread across three entities and three provisions of the Corporations Act, involved essentially similar if not identical conduct;

(b)    on ASIC’s case, Mr Pattenden’s contraventions in respect of ACBF Plans and ACBF Communities exposed those companies to risk but not to actual, measurable loss; and

(c)    Mr Pattenden has made appropriate admissions, taken responsibility for his conduct, and saved the public from the costs of a lengthy trial.

30    Taking these matters into account, I incline to the view that the proposed pecuniary penalty is towards the lower end of the “permissible range” referred to in Volkswagen. However, I am comfortably satisfied that it is within that range and that therefore, consistently with the authorities considered in FIIG, the proposed order should be made.

Costs and disposition

31    An order for costs in a lump sum is expressly authorised by r 40.02 of the Federal Court Rules 2011 (Cth) and would, in any event, be within the Court’s implied power in circumstances where the parties agree as to the amount that should be paid. There is no reason not to make the proposed costs order.

32    Orders will therefore be made in the terms proposed by the parties.

Associate:

Dated:    30 October 2026

ANNEXURE 1

STATEMENT OF AGREED FACTS AND ADMISSIONS OF THE FIRST DEFENDANT

FEDERAL COURT OF AUSTRALIA

DISTRICT REGISTRY: NEW SOUTH WALES

DIVISION: GENERAL    NO NSD 935 OF 2023

PART I    INTRODUCTION

1.    This Statement of Agreed Facts and Admissions (SAFA) is made jointly by the plaintiff (ASIC) and the first defendant (Mr Pattenden) for the purposes of section 191 of the Evidence Act 1995 (Cth).

2.    Mr Pattenden agrees to the contents contained herein pursuant to section 191 of the Evidence Act 1995 (Cth) for the purposes of this proceeding only. This agreement is not, and is not taken as, an admission outside of that context.

3.    ASIC commenced these proceedings against Mr Pattenden and the second defendant (Mr Law), the third defendant (Mr Wilson), the fourth defendant (Mr Jones) and the fifth defendant (Mr Clayton) on 30 August 2023. ASIC seeks declarations that the defendants contravened ss 180(1), 181(1) and 182(1) of the Corporations Act 2001 (Cth) (Corporations Act), orders that the defendants pay pecuniary penalties to the Commonwealth and disqualification orders against the defendants from managing corporations.

4.    By reason of the agreed facts and admissions in this document, Mr Pattenden admits that, between 4 September 2017 and 30 November 2018 (the Relevant Period), he contravened ss 180(1), 181(1) and 182(1) of the Corporations Act in relation to each of the ACBF Entities (as defined below).

PART II    PARTIES AND BACKGROUND

2.1 The parties

5.    ASIC is a body corporate established by s 7 of the Australian Securities Commission Act 1989 (Cth) and that continues by operation of s 261 of the ASIC Act. It is entitled to sue by reason of s 8 of the ASIC Act.

6.    The facts relevant to the roles and responsibilities of each of the defendants are set out in Part 2.5 below.

2.2 The ACBF business

7.    The proceedings relate to certain companies in the ACBF business, which operated to provide funeral benefits to nominated persons on the death of a fund member or nominee.

8.    The ACBF group of companies relevantly included:

8.1.    The Aboriginal Community Benefit Fund Pty Limited (ACBF 1). ACBF 1 operated Fund 1;

8.2.    Aboriginal Community Benefit Fund No 2 Pty Ltd (ACBF 2). ACBF 2 operated Fund 2;

8.3.    ACBF Funeral Plans Pty Ltd (ACBF Plans). ACBF Plans operated Fund 3;

8.4.    Community Funeral Plans Pty Ltd (ACBF Community). ACBF Community operated Fund 4;

8.5.    ACBF Consultants Pty Ltd;

8.6.    ACBF Group Holdings Pty Ltd (ACBF Group Holdings); and

8.7.    ACBF Administration Pty Ltd (ACBF Administration).

9.    ACBF 2, ACBF Plans and ACBF Community are referred to collectively in this SAFA as the ACBF Entities.

10.    The ACBF business was a single business with common management across each of the entities within that business. Mr Pattenden was the founder and, including during the Relevant Period, was responsible for overseeing the operation of and any significant decision relating to of the ACBF group of companies and business.

11.    In the period from 2010 to 30 November 2018, the ultimate holding company of the ACBF group of companies through which the ACBF business operated was ACBF Group Holdings. Just Solutions Limited (Just Solutions), a company registered in Vanuatu owned the majority of the shares in ACBF Group Holdings.

2.3 Operation of the Funds

12.    In summary, each of the ACBF Entities operated as follows. Further details are set out below.

13.    ACBF 2 was trustee of Fund 2, which operated as a trust established by deed. ACBF 2 operated Fund 2 from 1993 for the purpose of providing funeral benefits to nominated persons on the death of a fund member. Fund 2 was marketed to, and only available to, Indigenous Australians. Fund 2 was closed to new members from 2004.

14.    ACBF Plans operated Fund 3 from 2005. Fund 3 was subject to plan rules and was registered as a contributory funeral benefit business under the Funeral Funds Act 1979 (NSW) (Funeral Funds Act). ACBF Plans operated Fund 3 for the purpose of providing funeral benefits to nominated persons on the death of a fund member, and was marketed to, and until September 2017 was only available to, Indigenous Australians.

15.    ACBF Community operated Fund 4 from 2005. Fund 4 was subject to plan rules and was registered as a contributory funeral benefit business under the Funeral Funds Act. ACBF Community operated Fund 4 for the purpose of providing funeral benefits to nominated persons on the death of a fund member, and was marketed to non-Indigenous Australians.

16.    ACBF Administration provided the ACBF Entities with various administrative services in return for an administration fee.

2.3.1 ACBF 2 and Fund 2

17.    Between at least 2002 and 30 November 2018, Fund 2 relevantly operated as follows:

17.1.    fund members were required to make fortnightly payments as contribution amounts;

17.2.    the contribution amount to be paid by fund members was set out in the application form signed by the member and automatically increased according to the fund member’s age as follows:

17.3.    the contribution amounts paid by fund members were held on trust by ACBF 2 and were to be applied in accordance with the provisions of the trust deed;

17.4.    on the death of the fund member who had made at least 2 payments, and following the making of a claim to ACBF 2, ACBF 2 would pay $6,000 to a nominated person (subject to any increase of the amount to be paid, made on application by a member after paying contribution amounts for at least one year);

17.5.    where a fund member wrote to ACBF to cancel their membership, they would receive a payment on cancellation subject to having made 26 or more payments and having not increased the amount payable by ACBF 2, in an amount equal to one third of the member’s total membership payments from the 26th payment onwards;

17.6.    if the fund member applied to increase the amount to be paid, they were required to agree to give up their entitlement to a cancellation benefit;

17.7.    where a fund member missed payment of 4 payments in a calendar year:

17.7.1.    the fund member became a non-financial member. Fund 2 was not required to make a payment on the death of a non-financial member;

17.7.2.    ACBF2 would write to the non-financial member, asking that they recommence payments and pay all outstanding amounts within 1 month;

17.7.3.    if the non-financial member did so, they would no longer be a non-financial member;

17.7.4.    if the non-financial member failed to do so, membership was automatically cancelled and no payment was required to be made either on cancellation or on the death of the member; and

17.8.    where Fund 2 was wound up and there were surplus funds following the payment of Fund 2’s debts and liabilities, eligible fund members would be entitled to be repaid an amount up to the maximum amount of their cancellation benefit;

17.9.    any further surplus remaining after those payments were to be paid to the “Aboriginal Childrens Advancement Society” or, if that charity no longer existed, “some other charity with substantially similar objects as previously approved in writing by Crown”.

18.    Under the trust deed for Fund 2, ACBF 2 had the power to take such action as it thought fit for the adequate protection of any part or parts of the Fund.

19.    The trust deed for Fund 2:

19.1.    stated that it could not be amended except in accordance with the provisions of the trust deed; and

19.2.    could be amended on application under s 81 of the Trustees Act 1925 (NSW) by ACBF 2 to the Court.

20.    Prior to Fund 2 closing to new members in 2004, as at 31 December 2003 Fund 2 had approximately 15,760 members (including non-financial members).

21.    As at June 2017, Fund 2 had approximately 5,809 members. Each of those members had made fortnightly contributions to Fund 2 since at least 2004.

22.    As set out further below, Fund 2 was required to maintain an insurance policy to underwrite the lives of its fund members. From 2002, ACBF 2 used Crown Insurance Services Limited (Crown) as its underwriter.

23.    For the financial year 1 July 2016 to 30 June 2017, ACBF 2 had a net operating profit of $9,794.

24.    As at 30 June 2017, ACBF 2 had net assets of $952,622, including $1.44 million of cash and cash equivalents. The cash held by ACBF 2 was intended to cover the value of cancellation benefits payable to members.

25.    For the financial year 1 July 2017 to 30 June 2018, ACBF 2:

25.1.    received member contributions of $1,715,764;

25.2.    paid administration fees to ACBF Administration of $1,118,603;

25.3.    paid underwriting premiums to Crown of $922,990;

25.4.    received payments from Crown of:

25.4.1.    $546,091 by way of claim payments; and

25.4.2.    $61,650 by way of profit share payments; and

25.5.    had a net operating loss of $198,779.

26.    As at 30 June 2018, ACBF 2 had net assets of $753,843, including $1,210,447 of cash and cash equivalents.

27.    On 24 November 2021, ACBF 2 went into administration.

28.    On 2 March 2022, a liquidator was appointed to ACBF 2. On 11 April 2022, a receiver was appointed to Fund 2.

2.3.2 ACBF Plans and Fund 3, and ACBF Community and Fund 4

29.    Between at least 2005 and 30 November 2018, Funds 3 and 4 operated as follows:

29.1.    for Fund 3, membership was marketed to Indigenous Australians;

29.2.    for Fund 4, membership was marketed to non-Indigenous Australians;

29.3.    a person became a member by submitting a membership application form and their application being accepted;

29.4.    fund members were required to make regular (usually fortnightly) payments as contribution amounts;

29.5.    the contribution amounts to be paid by fund members were calculated in accordance with the application form signed by the member or otherwise agreed with ACBF Plans or ACBF Community and were determined by:

29.5.1.    the fund member’s age and chosen benefit amount; and

29.5.2.    a corresponding health classification based on information provided as part of the application process;

29.6.    on the death of a nominated person (including a fund member) and following the making of a claim to ACBF Plans or ACBF Community, ACBF Plans or ACBF Community would pay an amount comprising reimbursement for incurred funeral-related expenses (up to the nominated benefit amount) to or as directed by the nominated payee, calculated in accordance with the application form; and

29.7.    the rules and application form did not provide members with a cancellation payment on cancellation of their membership.

30.    The plan rules for Funds 3 and 4 stated that they could not be amended except in accordance with the provisions of the plan rules.

31.    As at 30 June 2017, ACBF Plans had net assets of $15,294.

32.    For the financial year 1 July 2017 to 30 June 2018, ACBF Plans:

32.1.    received member contributions of $3,638,533;

32.2.    paid administration fees to ACBF Administration of $2,637,899;

32.3.    paid underwriting premiums to Crown of $1,508,945;

32.4.    received payments from Crown of:

32.4.1.    $792,000 by way of claim payments; and

32.4.2.    $135,666 by way of profit share payments; and

32.5.    had a profit of $95,166.

33.    As at 30 June 2018, ACBF Plans had net assets of $110,460.

34.    As at 30 June 2017, ACBF Community had net assets of $8,957.

35.    For the financial year 1 July 2017 to 30 June 2018, ACBF Community:

35.1.    received member contributions of $91,252;

35.2.    paid administration fees to ACBF Administration of $15,901;

35.3.    paid underwriting premiums to Crown of $37,705;

35.4.    received payments from Crown of:

35.4.1.    $28,000 by way of claim payments; and

35.4.2.    $4,465 by way of profit share payments; and

35.5.    had a loss of $176.

36.    As at 30 June 2018, ACBF Community had net assets of $8,781.

37.    As at 30 June 2017:

37.1.    Fund 3 had 13,487 members; and

37.2.    Fund 4 had 308 members.

38.    On 11 March 2022, ACBF Plans, and ACBF Community entered liquidation.

2.4 Crown arrangements

39.    To operate the Funds, each ACBF Entity was required by the trust deed or plan rules (as applicable) to maintain an insurance policy that underwrote the lives of its fund members. Between 2002 and at least 30 November 2018, ACBF 2, ACBF Plans and ACBF Community chose to satisfy the requirement to maintain an insurance policy by insuring with Crown.

40.    Crown:

40.1.    was registered in Vanuatu by Mr Pattenden in 2002;

40.2.    provided insurance services to the ACBF Entities from 2002;

40.3.    between 2002 and 30 November 2018, operated its business from Vanuatu; and

40.4.    between 2002 and 30 November 2018, was not subject to prudential or other regulatory requirements in Australia.

41.    Between 2002 and 15 February 2022, the ACBF Entities were the only entities insured by Crown.

42.    Under the terms of the policies with Crown:

42.1.    the ACBF Entities were required to pay premiums to Crown (cl 9.1);

42.2.    on the death of a fund member or other nominee (as relevant), Crown was required to pay the relevant ACBF Entity the relevant sum insured (cl 8.2);

42.3.    Crown had the power to vary the premium by giving the ACBF Entity three months’ written notice (cl 9.5.1 for ACBF 2 and cl 9.5 for ACBF Plans and ACBF Community);

42.4.    where an ACBF Entity failed to pay the required premium 14 days after the due date, Crown could give three months’ notice of termination and the policy would lapse and cover would cease (cl 9.6 for ACBF 2 and cl 9.9 for ACBF Plans and ACBF Community);

42.5.    the policies were renewable annually at the expiry of the policy year, being the 12 months between annual review dates;

42.6.    there was no obligation on Crown to renew the policies at the annual review date;

42.7.    Crown and the ACBF Entities had a profit-sharing arrangement in accordance with a self-participation formula; and

42.8.    Crown was not required to provide services to the ACBF Entities other than the payment of claims by fund members.

43.    As set out in more detail below, on 4 September 2017 Crown doubled the premiums payable by Fund 2 with effect from 1 August 2017, the result of which was that for financial year 2018 Crown received more in premiums from Fund 2 than it paid in claims.

44.    From 2003 (for Fund 2) or 2006 (for Funds 3 and 4) to at least 2018, Crown paid to each of Funds 2, 3 and 4 a ‘profit share’ based on a formula set out in the Group Insurance Policy entered into between each of ACBF 2, ACBF Plans, ACBF Community and Crown as varied from time to time.

45.    The table below sets out for financial years 2002 to 2018 for Fund 2 the premiums received by Crown, claims paid by Crown, profit share paid by Crown and the net profit or loss of Crown.

46.    In total, for financial years 2002 to 30 November 2018, for Fund 2:

46.1.    Crown received $16,345,137 in premiums;

46.2.    Crown paid $8,056,029 in claims;

46.3.    Crown paid $2,266,816 in profit share; and

46.4.    Crown’s net premiums received less claims and profit share was $6,022,292.

47.    The table below sets out for financial years 2005 to 2018 for Fund 3 the premiums received by Crown, claims paid by Crown, profit share paid by Crown and the net profit or loss of Crown.

48.    Based on the above table, between 1 July 2005 and 30 November 2018, ACBF Plans paid Crown total premiums of approximately $22.6 million, approximately $7.5 million was paid by Crown by way of fund members’ claims and approximately $4.5 million was returned to ACBF Plans by way of profit-sharing payment.

49.    The table below sets out for financial years 2005 to 2018 for Fund 4 the premiums received by Crown, claims paid by Crown, profit share paid by Crown and the net profit or loss of Crown.

50.    Based on the above table, between 1 July 2005 and 30 November 2018, ACBF Community paid Crown total premiums of approximately $788,000, approximately $265,000 was paid by Crown by way of fund members’ claims and approximately $240,000 was returned to ACBF Community by way of profit-sharing payment.

2.5 Mr Pattenden’s role

51.    Mr Pattenden was:

51.1.    a director of ACBF 2 during the Relevant Period and also between:

51.1.1.    29 January 1992 and 18 October 2002;

51.1.2.    29 November 2007 and 7 January 2008; and

51.1.3.    19 May 2010 and 30 November 2018;

51.2.    a director of ACBF Plans during the Relevant Period and also between:

51.2.1.    10 December 1997 and 23 July 2007;

51.2.2.    29 November 2007 and 7 January 2008; and

51.2.3.    5 March 2014 and 30 November 2018;

51.3.    a director of ACBF Community during the Relevant Period and also between:

51.3.1.    23 May 1996 and 23 July 2007;

51.3.2.    29 November 2007 and 7 January 2008; and

51.3.3.    5 March 2014 and 30 November 2018;

51.4.    from at least April 2002 until 30 November 2018, responsible for overseeing the operation of and any significant decision relating to:

51.4.1.    the ACBF business; and

51.4.2.    the ACBF Entities,

and until October 2017 predominantly acted in the role of a chief executive officer or managing director of the ACBF business and the ACBF Entities during that time, but on and from October 2017, Mr Jones acted in the role of chief executive officer and Mr Clayton acted in the role of chief operating officer and financial controller;

51.5.    the founder and, at all material times, a director and, indirectly, the majority shareholder of Crown;

51.6.    indirectly, the majority shareholder of Just Solutions.

52.    On 30 November 2018, Just Solutions and ACBF Consultants Pty Ltd sold their shares in ACBF Group Holdings to Elah Valley Pty Ltd (Elah Valley). Mr Jones and Mr Clayton were the only directors and acquired ownership interests in ACBF Group Holdings through Elah Valley. As part of the sale agreement for ACBF Group Holdings, Elah Valley was bound to ensure that the ACBF Entities continued to insure with Crown.

2.5.1 Other defendants

53.    Mr Law was:

53.1.    a director of the ACBF Entities between 18 May 2017 and 30 November 2018;

53.2.    a director of Crown from 2008 until at least 30 November 2018;

53.3.    the sole shareholder of Asian Markets Limited;

53.4.    indirectly, the minority shareholder of Just Solutions through Mr Law’s company Asian Markets Limited during, at least, the Relevant Period;

53.5.    a beneficial owner of shares in Crown from:

53.5.1.    January 2008, directly; and

53.5.2.    2010 and throughout the Relevant Period through his shareholding in Asian Markets Limited; and

53.6.    at least during the Relevant Period, paid $50,000 per quarter for roles relating to Crown.

54.    Mr Wilson was:

54.1.    a director of ACBF 2 and ACBF Plans between 18 November 2014 and 19 December 2017;

54.2.    a secretary of ACBF 2 and ACBF Plans between 18 May 2017 and 19 December 2017;

54.3.    a director of ACBF Community between 18 November 2014 and 23 October 2017; and

54.4.    a secretary of ACBF Community between 18 May 2017 and 23 October 2017.

55.    Mr Wilson was employed as the company accountant and financial controller for the ACBF business (and ACBF Entities) from 6 March 2014 and November 2015 respectively.

56.    Mr Wilson formally ceased employment with the ACBF business (and ACBF Entities) on 7 February 2018 however he had stopped performing the duties of his role in around October or November 2017.

57.    Throughout his employment with the ACBF business, Mr Wilson:

57.1.    provided Mr Pattenden by email each month the figures relevant to the claims and premiums paid by each ACBF Entity to Crown;

57.2.    was responsible for causing the financial statements of the ACBF Entities to be prepared and liaising with the auditors in this respect, and dealt with the financial statements of the ACBF Entities ended 30 June 2016.

58.    Mr Jones was:

58.1.    a director and secretary of ACBF 2 from 18 December 2017 until 29 January 2021;

58.2.    a director and secretary of ACBF Plans from in or around 18 December 2017 until 29 January 2021;

58.3.    a director of ACBF Community from 23 October 2017 until 29 January 2021; and

58.4.    the Chief Executive Officer (CEO) of the ACBF business between 5 October 2017 and 30 November 2018.

59.    Mr Clayton ultimately took over the position of financial controller from Mr Wilson in around early October 2017. Mr Clayton was:

59.1.    a director of ACBF Community between 23 October 2017 until 20 November 2018;

59.2.    a secretary of ACBF Community between 23 October 2017 until 4 March 2019; and

59.3.    the Chief Operating Officer (COO) and a financial controller of the ACBF business from 5 October 2017 until at least 30 November 2018.

60.    During the Relevant Period, as applicable, each of Mr Law, Mr Wilson, Mr Jones and Mr Clayton:

60.1.    acted in accordance with Mr Pattenden’s instructions in relation to ACBF 2, ACBF Plans and ACBF Community; and

60.2.    deferred to Mr Pattenden for overseeing the operation of and any significant decision in relation to ACBF 2, ACBF Plans and ACBF Community.

PART III    ADMISSIONS ABOUT THE DOUBLING OF PREMIUMS FOR ACBF 2

3.1 Premium increase for ACBF 2

61.    Each month, Mr Pattenden was sent emails by Mr Wilson (or staff at the ACBF Group) attaching spreadsheets for each of Funds 2, 3 and 4 setting out details of:

61.1.    premium payments made to Crown by the relevant Fund;

61.2.    claims received by the relevant Fund, and the total claims payable by Crown to the Fund; and

61.3.    the amount of profit share payable by Crown to the relevant Fund.

62.    On 1 March 2017, Mr Wilson exchanged emails with Mr Pattenden attaching spreadsheets for each of Funds 2, 3 and 4 for February 2017 as referred to above. Mr Wilson noted in the email “I know you will be bitterly disappointed in these…”.

63.    On a date prior to 10 March 2017, Mr Pattenden informed Mr Wilson that the premiums to be paid by ACBF 2 to Crown would be doubled.

64.    On 10 March 2017, Mr Wilson emailed Mr Hughes (a partner at Small Myers Hughes, solicitor for the ACBF business), copied to Mr Pattenden, with the subject line ‘Fund 2’. In the email, Mr Wilson wrote:

Ron has advised that the premiums I send to Crown each month are to double.

If we are sending 40k at present that will double to $80k. That will mean an additional $480k over a full year.

In 2016, Fund 2 had taxable income of $121461…

If we are to double these premiums, going on 2016 figures, it will make a loss of around $360k. This could pose problems of insolvent trading.

Is this just a short term measure in hope that we can get all fund members over to plans asap ?

65.    On 13 March 2017, Mr Hughes suggested that ACBF 2 would remain viable if premiums were increased by $10k per month subject to Crown determining that the insurance remains viable at what would be a 25% increase.

66.    The approach suggested by Mr Hughes would have effectively increased the premium by an amount equivalent to Fund 2’s taxable income in 2016.

67.    No action was taken in March through to August 2017 to increase the Crown premium for ACBF 2.

68.    On 30 June 2017, Mr Wilson emailed Mr Hughes and Mr Pattenden attaching spreadsheets for each of Funds 2, 3 and 4 for June 2017 and noted “they look horrible”. Mr Wilson also stated “Fund 2 is terrible after claims of Feb 1, March 1, April 2, May 4, we have 8 claims for June, albeit 5 of those were late May deaths.” The spreadsheet for Fund 2 attached to the email indicated that for June 2017, it was estimated that Crown would receive a payment from Fund 2 of $44,707.60 and need to pay back to Fund 2 $103,000, resulting in a loss to Crown for June 2017 of $58,292.

69.    On or around 4 September 2017, Mr Pattenden called Mr Law and told Mr Law that Crown would double the premium payable by Fund 2, and instructed Mr Law to draft a letter from Crown to Fund 2 in relation to the doubling of premiums.

70.    At 1:09pm on 4 September 2017, Mr Law emailed Mr Wilson, copied to Mr Pattenden:

Following telephone call from Ron, see draft below to go on Crown letterhead.

Can you check wording please and also advise new address. Is it better if Ron signs the letter rather than me?

Thanks

Jon

*********************************

4th September 2017

Michael Wilson

Financial Controller/Director

ACBF Group of Companies

????? (was 44A Griffith Street)

Coolangatta 4225

Dear Michael

Increase in premiums – Fund 2

In regards to Fund 2 we request that you increase the premiums by 100% to payers and nominees effective from 1st August 2017.

This decision is being made due to payer higher risk factors.

Kind regards

Crown Insurance Services Limited

Ron Pattenden

Director

71.    At 1:26pm on 4 September 2017, Mr Wilson responded to the email described at paragraph 70 above stating that the “wording is fine….Doesn’t really matter if it is you or Ron, either will do. Ron would probably ask you to sign this.”

72.    At 1:57pm on 4 September 2017, Mr Law sent a letter to Mr Wilson copied to Mr Pattenden. The letter stated:

Increase in premiums - Fund 2

In regards to Fund 2 we request that you increase the premiums by 100% to payers and nominees effective from 1st August 2017.

This decision is being made due to payer higher risk factors.

73.    At 2:23pm on 4 September 2017, Mr Wilson sent an email to Mr Pattenden copied to Mr Hughes which attached the payout amount if all Fund 2 members cancelled as of 31 August 2017.

74.    At 4:54pm on 4 September 2017, Mr Hughes responded to the email described at paragraph 73 above to Mr Wilson, copying Mr Pattenden, stating that:

Crown is clearly not in a position to maintain the existing premium structure with Fund 2. It has become unviable to do so. … I recommend that Crown immediately increase premiums to remain viable. That increase can be met from the reserve held for the cancellation payments. It is a matter for discussion between Crown and Fund 2 as to how much the premiums should increase. I suggest quotes be obtained, as well as a back payment for reduced premiums paid in the past. I have no doubt that Crown is significantly undercharging Fund 2.

75.    On 5 September 2017, Mr Wilson forwarded to Mr Hughes the 4 September letter from Crown Insurance to ACBF 2 stating, “Find attached the document that was agreed between Crown and Fund 2.”

76.    On 5 September 2017, Mr Hughes responded to Mr Wilson’s email described at paragraph 75 above copying Mr Pattenden, saying: “Just to be clear – Fund 2 will be paying the increased premiums, not the plan holders?”, to which Mr Wilson responded “That is correct David”.

77.    On 6 September 2017, Mr Pattenden responded to Mr Hughes’ email described at paragraph 74 above stating: “David we have doubled the premiums for Fund 2 plan holders as of 1st August letter from Jon Law requesting this due to much higher risk factor I think this will help”.

78.    On 6 September 2017, Mr Wilson sent a letter to Crown confirming the amount paid by ACBF 2 in premiums for August 2017 incorporating the doubled premium.

3.2 Effect of the premium increase and Crown arrangements on ACBF 2

79.    Between 4 September 2017 and 30 November 2018, the premiums paid by ACBF 2 to Crown, the claims paid by Crown to ACBF 2, and profit share paid by Crown to ACBF 2 were as follows:

80.    As referred to in paragraphs 23 and 25.5 above, ACBF 2 went from an operating profit of $9,794 for the financial year ending 30 June 2017 to an operating loss of $198,779 for the financial year ending 30 June 2018.

81.    At the time of the premium increase and continuing until 30 November 2018:

81.1.    Fund 2 was closed to new members;

81.2.    ACBF 2 maintained cash reserves for the purpose of meeting its potential liability to pay cancellation benefits to fund members, which liability was not insured under the policy with Crown;

81.3.    ACBF 2 was not accumulating, or attempting to accumulate, amounts from which to pay claims by fund members;

81.4.    ACBF 2 did not otherwise maintain cash reserves for the purpose of paying fund members’ claims and instead relied on the policy with Crown for this purpose, with such reliance arising from the fact that ACBF 2 did not have any alternative source of funds to pay member claims;

81.5.    ACBF 2 could not increase its revenue from member contributions without:

81.5.1.    altering the terms of the trust deed to allow it to increase member contributions, which, according to the trust deed, would have required the written consent of 75% of fund members; or

81.5.2.    applying to the Court to vary the trust deed under s 81 of the Trustees Act 1925 (NSW);

81.6.    an increase in premium of 100% would have a significant negative impact on ACBF 2’s financial position:

81.6.1.    With the doubling of the Crown premiums during the Relevant Period, ACBF 2’s projected cash position went from remaining positive indefinitely to $0 within four years.

81.6.2.    In addition, if ACBF 2 had been brought to an end, it would have had amounts available to pay creditors or fund members eligible for cancellation benefits. If ACBF 2 had been wound up, there would have been surplus funds following the payment of debts and liabilities for eligible fund members (approximately 10% of the fund members) to be repaid an amount up to the maximum amount of their cancellation benefit. Any further surplus remaining after those payments were to be paid to the “Aboriginal Childrens Advancement Society” or if that charity no longer existed “some other charity with substantially similar objects as previously approved in writing by Crown”.

81.7.    Fund 2 had options available to it in lieu of continuing the Crown arrangements, namely:

81.7.1.    accepting the Crown higher premium rates but with mitigation by attempting to increase contribution rates or negotiating lower administration fees; and

81.7.2.    negotiating and agreeing alternative terms with Crown;

81.7.3.    attempting to find an alternative insurer;

81.7.4.    moving to a self-insurance arrangement; and

81.7.5.    winding up.

82.    If calculations were performed at the time by Mr Pattenden, the result of those calculations would have been:

82.1.    ACBF 2 could have withstood a 33% premium increase by Crown and remained solvent for 15 years.

82.2.    ACBF 2 could have accepted the Crown premium increase and remained solvent considerably longer if administration fees could be reduced and contribution increased.

82.3.    ACBF 2 could have self-insured and remained solvent for seven years, and for considerably longer if administration fees could be reduced and contribution increased.

82.4.    If ACBF 2 had been wound up, it would have sufficient funds to pay out:

82.4.1.    all cancellation benefits.

83.    At the time of the premium increase and continuing until 30 November 2018, there was a substantial risk that:

83.1.    in the circumstances described in paragraphs 81 and 82 above, the effect of the premium increase would be that ACBF 2 would become insolvent within approximately four or less years and would need to be wound up.

83.2.    if ACBF 2 was wound up in insolvency, ACBF 2’s policy with Crown would be terminated and eligible members of Fund 2 would not be able to recover all or part of any cancellation benefit they were owed; and

83.3.    if fund members’ cover was cancelled, they would be without funeral cover.

84.    Mr Pattenden ought to have known the fact described at subparagraph 83.1 above because it would have been revealed had he asked for analysis to be undertaken of the effect of the 100% premium increase on ACBF 2’s financial position, which he did not do but ought to have done.

3.3 Effect of the premium increase and Crown arrangements on ACBF Plans and ACBF Community

85.    At the time of the premium increase and continuing until 30 November 2018, ACBF Plans and ACBF Community were vulnerable to unaffordable (in the sense described in subparagraph 85.4 below) premium increases by Crown in circumstances where:

85.1.    under the policies, Crown could increase the premium payable by ACBF Plans and ACBF Community at any time by any amount;

85.2.    ACBF Plans and ACBF Community depended on Crown paying claims under policies in order to meet claims by fund members, with such dependence arising from the fact that ACBF Plans and ACBF Community did not have any alternative source of funds to pay member claims;

85.3.    ACBF Plans and ACBF Community were not accumulating, or attempting to accumulate, amounts from which to pay claims by fund members;

85.4.    if Crown increased premiums, whether by doubling those premiums as it had done for ACBF 2 or by increasing the premiums at all, the effect of the premium increase would be, in each case, that ACBF Plans and ACBF Community would immediately become insolvent. ACBF Plans and ACBF Community could have remained solvent indefinitely if they were permitted to, and did, self-insure;

85.5.    In addition, if ACBF Plans and ACBF Community had been brought to an end, it would have had amounts available to pay creditors or fund members.

85.6.    Mr Pattenden ought to have known the facts described at subparagraphs 85.1 to 85.5 above because it would have been revealed had he asked for analysis to be undertaken of the relationship between Crown’s premiums and ACBF Plans’ and ACBF Community’s financial position, which he did not do but ought to have done.

85.7.    if ACBF Plans and ACBF Community were wound up in insolvency, their respective fund members’ cover would be cancelled and they would be without funeral cover; and

85.8.    Funds 3 and 4 had options available to it in lieu of continuing the Crown arrangements, namely:

85.8.1.    negotiating and agreeing alternative terms with Crown;

85.8.2.    attempting to find an alternative insurer;

85.8.3.    subject to any regulatory approval, moving to a self-insurance arrangement;

85.8.4.    negotiating lower administration fees;

85.8.5.    attempting to increase contribution rates; and

85.8.6.    winding up.

PART IV    FORMAL ADMISSIONS RELATING TO SS 180(1), 181(1), 182(1) OF THE CORPORATIONS ACT

4.1 ACBF 2

86.    By 4 September 2017, and continuing until 30 November 2018, Mr Pattenden:

86.1.    with Mr Law were the ultimate co-owners and co-controllers of Crown, had a direct or indirect financial interest in Crown, and benefitted financially from ACBF 2 insuring with Crown;

86.2.    knew that if the premiums paid by ACBF 2 to Crown were to double from the amount paid by ACBF 2 before the Relevant Period, then there was a risk for ACBF 2 that it would become insolvent;

86.3.    knew that on 4 July 2017 that for at least some members of Fund 2, who were getting older, the payouts per member were $15,000, and that this was hurting Crown’s financial position at that time;

86.4.    knew that on 4 September 2017, he, Mr Law and Mr Wilson had agreed that the premium paid by ACBF 2 to Crown would increase by 100% effective from 1 August 2017 at Mr Pattenden’s direction;

86.5.    knew that ACBF 2 paid Crown premiums in amounts that were double the amount of the premium that had previously been paid;

86.6.    knew or ought to have known that an increase in premium of 100% would have a significant negative impact on ACBF 2’s financial position;

86.7.    ought to have known that the effect of the premium increase would be that ACBF 2 would become insolvent within approximately four or less years and would need to be wound up;

86.8.    ought to have known that there was a substantial risk that if ACBF 2 was wound up in insolvency, the remaining members of Fund 2:

86.8.1.    would not be able to recover all or part of any cancellation benefit they were entitled; and

86.8.2.    would be without funeral cover;

86.9.    knew or ought to have known that ACBF 2 maintained its policy with Crown at the increased premium; and

86.10.    by causing ACBF 2 to maintain its policy with Crown at the increased premium, he and Mr Law (through Crown) benefitted financially from ACBF 2 continuing to pay premiums.

87.    A reasonable director or officer of a corporation in ACBF 2’s circumstances and who occupied the office held by Mr Pattenden and had the same responsibilities, and who had knowledge of the risks to ACBF 2 and its fund members referred to in paragraph 86 above, in acting with care and diligence when considering whether:

87.1.    to pay the increased premium to Crown on behalf of ACBF 2; and

87.2.    to continue to maintain ACBF 2’s policy with Crown,

would have taken all necessary steps to:

87.3.    consider whether the Crown policy was in the interests of ACBF 2, both generally and at the time of the doubling of ACBF 2’s premium;

87.4.    pursue alternatives to ACBF 2’s insurance arrangements with Crown, including considering whether to:

87.4.1.    renegotiate the Crown insurance policy;

87.4.2.    cancel the Crown insurance policy and transition to self-insurance (and whether and how to amend the trust deed to allow for this);

87.4.3.    attempt to find a cheaper external insurer;

87.4.4.    increase reserves from which to pay Crown; and

87.4.5.    wind up the trust and pay eligible members who were entitled to it a cancellation benefit.

88.    At all times from 4 September 2017 (the date of the decision to increase the premium) and continuing until 30 November 2018, Mr Pattenden:

88.1.    failed to consider properly or at all the effect of the Crown arrangements on the financial position of ACBF 2;

88.2.    failed to consider properly or at all whether continuing the policy with Crown was in the best interests of ACBF 2 and its fund members;

88.3.    failed to consider properly or at all whether there were alternative options available to ACBF 2, as described in paragraph 87.4 above, that would have been in the best interests of ACBF 2 and its fund members;

88.4.    failed to pursue properly or at all any of the alternative options described in paragraph 87.4 above;

88.5.    preferred Crown’s and ultimately his and Mr Law’s financial interests in causing ACBF 2 to maintain its Crown arrangements;

88.6.    preferred Crown’s and ultimately his and Mr Law’s financial interests in causing or allowing ACBF 2 to accept or agree to pay the increased premium, payment of which occurred on 15 occasions between 4 September 2017 and 30 November 2018; and

88.7.    failed to ensure properly or at all that ACBF 2, as trustee for Fund 2, took all necessary and reasonable steps to protect the Fund (contrary to cl 13.9 of the trust deed).

89.    Based on the matters described in paragraph 88 above, between 4 September 2017 and 30 November 2018, Mr Pattenden:

89.1.    failed to discharge his duties to ACBF 2 with the degree of care and diligence that a reasonable person would exercise, if they were a director or officer of a corporation in ACBF 2’s circumstances, and occupied the offices held by Mr Pattenden, and had the same responsibilities within the corporation; and

89.2.    as a result, breached s 180(1) of the Corporations Act.

90.    By reason of the matters described in paragraph 86 above, and Mr Pattenden’s positions within the ACBF business as set out in paragraph 51 above, Mr Pattenden:

90.1.    caused ACBF 2 to maintain the arrangements with Crown from 4 September 2017 until 30 November 2018 without taking any or all necessary steps to consider and pursue the matters in paragraph 87.4 above;

90.2.    caused ACBF 2 to pay an increase in premium of 100% without taking any or all necessary steps to consider and pursue the matters in paragraph 87.4 above; and

90.3.    failed to take all necessary steps to manage the conflict of interest that arose between his and Mr Law’s duties to ACBF 2 and his and Mr Law’s interest in Crown;

90.4.    used his position as a director or officer of ACBF 2 to:

90.4.1.    obtain an advantage for Crown and ultimately himself and Mr Law; and

90.4.2.    cause a detriment to ACBF 2.

91.    Mr Pattenden’s conduct referred to in paragraph 90 above:

91.1.    was not in good faith in the best interests of ACBF 2;

91.2.    was done for the improper purpose of gaining an advantage for Crown and ultimately himself and Mr Law; and

91.3.    resulted in Mr Pattenden:

91.3.1.    gaining an advantage for Crown and ultimately himself and Mr Law ; and

91.3.2.    causing detriment to ACBF 2.

92.    For each of the acts or omissions described in paragraphs 90 and 91 above, between 4 September 2017 and 30 November 2018, Mr Pattenden:

92.1.    failed to exercise his powers and discharge his duties in good faith in the best interests of any of ACBF 2 and for a proper purpose, and as a result contravened s 181(1) of the Corporations Act; and

92.2.    used his position contrary to and in contravention of s 182(1) of the Corporations Act.

93.    From 4 September 2017 until 30 November 2018, the contraventions of ss 180(1), 181(1) and 182(1) of the Corporations Act by Mr Pattenden, as admitted by Mr Pattenden in paragraphs 89 to 92 above:

93.1.    materially prejudiced the financial interests of ACBF 2 and its members;

93.2.    materially prejudiced the ability of ACBF 2 to pay its creditors; or

93.3.    were serious.

4.2 ACBF Plans

94.    By 4 September 2017, and until 30 November 2018, Mr Pattenden:

94.1.    ought to have known that ACBF Plans was vulnerable to an increase in premiums by Crown in that the effect of any premium increase would be that ACBF Plans would immediately become insolvent;

94.2.    ought to have known that there was a substantial risk that if ACBF Plans was wound up in insolvency, the members of ACBF Plans:

94.2.1.    would have their cover cancelled; and

94.2.2.    would be without funeral cover;

94.3.    knew or ought to have known that ACBF Plans maintained its policy with Crown; and

94.4.    ought to have known that, by ACBF Plans maintaining its policy with Crown giving rise to the vulnerability described in paragraph 94.1 above:

94.4.1.    he and Mr Law (through Crown) benefitted financially from ACBF Plans continuing to pay premiums; and

94.4.2.    he preferred the financial interests of Crown, himself and Mr Law over the financial interests of ACBF Plans and fund members.

95.    A reasonable director or officer of a corporation in ACBF Plans’ circumstances and who occupied the office held by Mr Pattenden and had the same responsibilities, and who had knowledge of the risks to ACBF Plans and its fund members referred to in paragraph 94 above, in acting with care and diligence when considering whether to continue to maintain ACBF Plans’ policy with Crown, would have taken all necessary steps to:

95.1.    consider whether the Crown policy was in the interests of ACBF Plans, both generally and at the time of the doubling of ACBF 2’s premium; and

95.2.    pursue alternatives to ACBF Plans’ insurance arrangements with Crown, including considering whether to:

95.2.1.    renegotiate the Crown insurance policy;

95.2.2.    cancel the Crown insurance policy and, subject to any regulatory approval, transition to self-insurance (and whether and how to amend the plan rules to allow for this);

95.2.3.    attempt to find a cheaper external insurer;

95.2.4.    increase reserves from which to pay Crown; and

95.2.5.    wind up the company and pay the remaining funds to members.

96.    At all times from 4 September 2017 (the date of the decision to increase the premium for ACBF 2) until 30 November 2018, Mr Pattenden:

96.1.    failed to consider properly or at all the effect of the Crown arrangements on the financial position of ACBF Plans;

96.2.    failed to consider properly or at all whether continuing the policy with Crown was in the best interests of ACBF Plans and its fund members;

96.3.    failed to consider properly or at all whether there were alternative options available to ACBF Plans, as described in paragraph 95.2 above, that would have been in the best interests of ACBF Plans and its fund members;

96.4.    failed to pursue properly or at all any of the alternative options described in paragraph 95.2 above; and

96.5.    preferred Crown’s and ultimately his and Mr Law’s financial interests in causing ACBF Plans to maintain its Crown arrangements.

97.    Based on the matters described in paragraph 96 above, from 4 September 2017 until 30 November 2018, including when ACBF 2 paid the increased premium and thus presented the vulnerability for ACBF Plans described in paragraph 94.1 above, Mr Pattenden:

97.1.    failed to discharge his duties to ACBF Plans with the degree of care and diligence that a reasonable person would exercise, if they were a director or officer of a corporation in ACBF Plans’ circumstances, and occupied the offices held by Mr Pattenden and had the same responsibilities within the corporation; and

97.2.    as a result, breached s 180(1) of the Corporations Act.

98.    By reason of the matters described in paragraph 94 above, and Mr Pattenden’s positions within the ACBF business as set out in paragraph 51 above, Mr Pattenden:

98.1.    caused ACBF Plans to maintain the arrangements with Crown from 4 September 2017 until 30 November 2018 without taking any or all of the necessary steps to consider and pursue the matters in paragraph 95.2 above;

98.2.    failed to take all necessary steps to manage the conflict of interest that arose between his duties to ACBF Plans and his interest in Crown, or Mr Law’s duties to ACBF Plans and Mr Law’s interest in Crown; and

98.3.    used his position as a director or officer of ACBF Plans to:

98.3.1.    obtain an advantage for himself, Mr Law and Crown; and

98.3.2.    cause a detriment to ACBF Plans.

99.    Mr Pattenden’s conduct described in paragraph 98 above:

99.1.    was not in good faith in the best interests of ACBF Plans;

99.2.    was done for the improper purpose of gaining an advantage for Crown and ultimately himself and Mr Law ; and

99.3.    resulted in Mr Pattenden:

99.3.1.    gaining an advantage for Crown and ultimately himself and Mr Law; and

99.3.2.    causing detriment to ACBF Plans.

100.    For each of the acts or omissions described in paragraphs 99 and 99 above, including when ACBF 2 paid the increased premium from 4 September 2017 until 30 November 2018 and thus presented the vulnerability for ACBF Plans described in paragraph 94.1 above, Mr Pattenden:

100.1.    failed to exercise his powers and discharge his duties in good faith in the best interests of ACBF Plans and for a proper purpose, and as a result contravened s 181(1) of the Corporations Act; and

100.2.    used his position contrary to and in contravention of s 182(1) of the Corporations Act.

101.    From 4 September 2017 until 30 November 2018, the contraventions of ss 180(1), 181(1) and 182(1) of the Corporations Act by Mr Pattenden, as admitted by Mr Pattenden in paragraphs 97 to 100 above:

101.1.    materially prejudiced the financial interests of ACBF Plans and its members;

101.2.    materially prejudiced the ability of ACBF Plans to pay its creditors; or

101.3.    were serious.

4.3 ACBF Community

102.    By 4 September 2017, and until 30 November 2018, Mr Pattenden:

102.1.    ought to have known that ACBF Community was vulnerable to an increase in premiums by Crown in that the effect of any premium increase would be that ACBF Community would immediately become insolvent;

102.2.    ought to have known that there was a substantial risk that if ACBF Community was wound up in insolvency, the members of ACBF Community:

102.2.1.    would have their cover cancelled; and

102.2.2.    would be without funeral cover;

102.3.    knew or ought to have known that ACBF Community maintained its policy with Crown; and

102.4.    ought to have known that, by ACBF Community maintaining its policy with Crown giving rise to the vulnerability described in subparagraph 102.1 above:

102.4.1.    with Mr Law (through Crown) benefitted financially from ACBF Community continuing to pay premiums; and

102.4.2.    preferred the financial interests of Crown and ultimately himself and Mr Law over the financial interests of ACBF Community and fund members.

103.    A reasonable director or officer of a corporation in ACBF Community’s circumstances and who occupied the office held by Mr Pattenden and had the same responsibilities, and who had knowledge of the risks to ACBF Community and its fund members referred to in paragraph 102 above, in acting with care and diligence when considering whether to continue to maintain ACBF Community’s policy with Crown, would have taken all necessary steps to:

103.1.    consider whether the Crown policy was in the interests of ACBF Community, both generally and at the time of the doubling of ACBF 2’s premium; and

103.2.    pursue alternatives to ACBF Community’s insurance arrangements with Crown, including considering whether to:

103.2.1.    renegotiate the Crown insurance policy;

103.2.2.    cancel the Crown insurance policy and, subject to any regulatory approval, transition to self-insurance (and whether and how to amend the plan rules to allow for this);

103.2.3.    attempt to find a cheaper external insurer;

103.2.4.    increase reserves from which to pay Crown; and

103.2.5.    wind up the company and pay the remaining funds to members.

104.    At all times from 4 September 2017 (the date of the decision to increase the premium for ACBF 2) until 30 November 2018, Mr Pattenden:

104.1.    failed to consider properly or at all the effect of the Crown arrangements on the financial position of ACBF Community;

104.2.    failed to consider properly or at all whether continuing the policy with Crown was in the best interests of ACBF Community and its fund members;

104.3.    failed to consider properly or at all whether there were alternative options available to ACBF Community, as described in paragraph 103.2 above, that would have been in the best interests of ACBF Community and its fund members;

104.4.    failed to pursue properly or at all any of the alternative options described in paragraph 103.2 above; and

104.5.    preferred Crown and ultimately his own and Mr Law’s financial interests in causing ACBF Community to maintain its Crown arrangements.

105.    Based on the matters described in paragraph 104 above, from 4 September 2017 until 30 November 2018, including when ACBF 2 paid the increased premium and thus presented the vulnerability for ACBF Community described in paragraph 102.1 above, Mr Pattenden:

105.1.    failed to discharge his duties to ACBF Community with the degree of care and diligence that a reasonable person would exercise, if they were a director or officer of a corporation in ACBF Community’s circumstances, and occupied the offices held by Mr Pattenden and had the same responsibilities within the corporation; and

105.2.    as a result, breached s 180(1) of the Corporations Act.

106.    By reason of the matters described in paragraph 102 above, and Mr Pattenden’s positions within the ACBF business as set out in paragraph 51 above, Mr Pattenden:

106.1.    caused ACBF Community to maintain the arrangements with Crown from 15 September 2017 until 30 November 2018 without taking any or all of the necessary steps to consider and pursue the matters in paragraph 103.2 above;

106.2.    failed to take all necessary steps to manage the conflict of interest that arose between Mr Pattenden’s duties to ACBF Community and Mr Pattenden’s interest in Crown, or Mr Law’s duties to ACBF Community and Mr Law’s interest in Crown; and

106.3.    used his position as a director or officer of ACBF Community to:

106.3.1.    obtain an advantage for Crown and ultimately himself and Mr Law ; and

106.3.2.    cause a detriment to ACBF Community.

107.    Mr Pattenden’s conduct described in paragraph 106 above:

107.1.    was not in good faith in the best interests of ACBF Community;

107.2.    was done for the improper purpose of gaining an advantage for Crown and ultimately himself and Mr Law ; and

107.3.    resulted in Mr Pattenden:

107.3.1.    gaining an advantage for Crown and ultimately himself and Mr Law ; and

107.3.2.    causing detriment to ACBF Community.

108.    For each of the acts or omissions described in paragraphs 106 and 107 above, including when ACBF 2 paid the increased premium from 4 September 2017 until 30 November 2018 and thus presented the vulnerability for ACBF Community described in in paragraph 102.1 above, Mr Pattenden:

108.1.    failed to exercise his powers and discharge his duties in good faith in the best interests of ACBF Community and for a proper purpose, and as a result contravened s 181(1) of the Corporations Act; and

108.2.    used his position contrary to and in contravention of s 182(1) of the Corporations Act.

109.    From 4 September 2017 until 30 November 2018, the contraventions of ss 180(1), 181(1) and 182(1) of the Corporations Act by Mr Pattenden, as admitted by Mr Pattenden in paragraphs 105 to 108 above:

109.1.    materially prejudiced the financial interests of ACBF Community and its members;

109.2.    materially prejudiced the ability of ACBF Community to pay its creditors; or

109.3.    were serious.

PART V    ADMISSIONS OF OTHER FACTS

5.1 The nature of the loss or damage suffered

5.1.1    ACBF 2

110.    Paragraphs 81.6 and 81.7 above outline how the increase in Crown premiums by 100% for ACBF 2 had a material negative impact on ACBF’s financial position and describes alternative scenarios or possibilities that could have been pursued by Mr Pattenden.

111.    As described in paragraph 87.4 above, Mr Pattenden had options available to him to pursue for ACBF 2 in lieu of continuing the Crown arrangements or varying the arrangements with Crown but did not consider or pursue any such alternative options.

5.2 Mr Pattenden’s financial position

112.    Mr Pattenden does not rely on his financial position to mitigate the penalty.

5.3 Whether previously found to have engaged in similar conduct

113.    Mr Pattenden has not been found to have engaged in similar conduct.

5.4 Cooperation with ASIC and contrition

114.    Mr Pattenden:

114.1.    participated in the mediation in good faith at which time the proceedings against him were settled;

114.2.    cooperated with ASIC to agree a detailed SAFA setting out the underlying facts and admissions going to his liability and penalty; and

114.3.    cooperated with ASIC and agreed to the declarations set out at Annexure A.

115.    As a result of his willingness to settle the matter, ASIC has been spared a contested trial of an estimated 3 week duration with the consequent savings in time and cost to the public and ASIC (as it will enable it to focus on and pursue other matters).

Date: 2025

James Docherty

AGS lawyer

for and on behalf of the Australian Government Solicitor

Lawyer for the Plaintiff

^Name of lawyer signing^

Small Myers Hughes

Lawyer for the First Defendant

ANNEXURE A

FEDERAL COURT OF AUSTRALIA

DISTRICT REGISTRY: NEW SOUTH WALES

DIVISION: General    NO NSD 935 OF 2023

THE COURT DECLARES

MR PATTENDEN

1.    Under s 1317E(1) of the Corporations Act 2001 (Cth) (Corporations Act) that, in his capacity as a director of Aboriginal Community Benefit Fund No 2 Pty Ltd (ACBF 2), between 4 September 2017 and 30 November 2018, the First Defendant:

1.1.    failed to consider properly or at all the effect of the Crown Insurance Services Limited (Crown) arrangements on the financial position of ACBF 2;

1.2.    failed to consider properly or at all whether continuing the policy with Crown was in the best interests of ACBF 2 and its fund members;

1.3.    failed to consider properly or at all whether there were alternative options available to ACBF 2 that would have been in the best interests of ACBF 2 and its fund members;

1.4.    failed to pursue properly or at all any alternative options available to ACBF 2;

1.5.    preferred his, the Second Defendant’s and Crown’s financial interests in causing ACBF 2 to maintain its Crown arrangements;

1.6.    preferred his, the Second Defendant’s and Crown’s financial interests in causing or allowing ACBF 2 to accept or agree to pay the increased premium, payment of which occurred on 15 occasions between 4 September 2017 and 30 November 2018; and

1.7.    failed to ensure properly or at all that ACBF 2, as trustee for the funeral fund operated by it (Fund 2), took all necessary and reasonable steps to protect the Fund (contrary to cl 13.9 of Fund 2’s trust deed),

and by reason of the above:

1.8.    failed to discharge his duties to ACBF 2 with the degree of care and diligence that a reasonable person would exercise, if they were a director or officer of a corporation in ACBF 2’s circumstances, and occupied the offices held by the First Defendant, and had the same responsibilities within the corporation; and

1.9.    as a result, breached s 180(1) of the Corporations Act.

2.    Under s 1317E(1) of the Corporations Act that, in his capacity as a director of ACBF 2, between 4 September 2017 and 30 November 2018:

2.1.    the First Defendant:

2.1.1.    had a material personal interest in the Crown policy held by ACBF 2;

2.1.2.    caused ACBF 2 to maintain the arrangements with Crown without taking any or all necessary steps to consider and pursue the alternative options available to ACBF 2;

2.1.3.    caused ACBF 2 to pay an increase in premium of 100% without taking any or all necessary steps to consider and pursue the alternative options available to ACBF 2; and

2.1.4.    failed to take all necessary steps to manage the conflict of interest that arose between his and the Second Defendant’s duties to ACBF 2 and his and the Second Defendant’s interest in Crown;

2.1.5.    used his position as a director or officer of ACBF 2 to:

2.1.5.1.    obtain an advantage for Crown and ultimately himself and the Second Defendant; and

2.1.5.2.    cause a detriment to ACBF 2,

2.2.    the First Defendant’s conduct referred to in 2.1 above:

2.2.1.    was not in good faith in the best interests of ACBF 2;

2.2.2.    was done for the improper purpose of gaining an advantage for Crown and ultimately himself and the Second Defendant ; and

2.2.3.    resulted in the First Defendant:

2.2.3.1.    gaining an advantage for Crown and ultimately himself and the Second Defendant; and

2.2.3.2.    causing detriment to ACBF 2,

2.3.    by reason of the circumstances in 2.1 and 2.2 above, the First Defendant:

2.3.1.    failed to exercise his powers and discharge his duties in good faith in the best interests of any of ACBF 2 and for a proper purpose, and as a result contravened s 181(1) of the Corporations Act; and

2.3.2.    used his position contrary to and in contravention of s 182(1) of the Corporations Act.

3.    Under s 1317E(1) of the Corporations Act that, in his capacity as a director of ACBF Funeral Plans Pty Ltd (ACBF Plans) between 4 September 2017 and 30 November 2018, the First Defendant:

3.1.    failed to consider properly or at all the effect of the Crown arrangements on the financial position of ACBF Plans;

3.2.    failed to consider properly or at all whether continuing the policy with Crown was in the best interests of ACBF Plans and its fund members;

3.3.    failed to consider properly or at all whether there were alternative options to available to ACBF Plans that would have been in the best interests of ACBF Plans and its fund members;

3.4.    failed to pursue properly or at all any alternative options available to ACBF Plans;

3.5.    preferred his, the Second Defendant’s and Crown’s financial interests in causing ACBF Plans to maintain its Crown arrangements;

and by reason of the above:

3.6.    failed to discharge his duties to ACBF Plans with the degree of care and diligence that a reasonable person would exercise, if they were a director or officer of a corporation in ACBF Plans’ circumstances, and occupied the offices held by the First Defendant, and had the same responsibilities within the corporation; and

3.7.    as a result, breached s 180(1) of the Corporations Act.

4.    Under s 1317E(1) of the Corporations Act that, in his capacity as a director of ACBF Plans, between 4 September 2017 and 30 November 2018:

4.1.    the First Defendant:

4.1.1.    had a material personal interest in the Crown policy held by ACBF Plans;

4.1.2.    caused ACBF Plans to maintain the arrangements with Crown without taking any or all necessary steps to consider and pursue the alternative options available to ACBF Plans;

4.1.3.    failed to take all necessary steps to manage the conflict of interest that arose between his and the Second Defendant’s duties to ACBF Plans and his and the Second Defendant’s interest in Crown;

4.1.4.    used his position as a director or officer of ACBF Plans to:

4.1.4.1.    obtain an advantage for Crown and ultimately himself and the Second Defendant; and

4.1.4.2.    cause a detriment to ACBF Plans,

4.2.    the First Defendant’s conduct referred to in 4.1 above:

4.2.1.    was not in good faith in the best interests of ACBF Plans;

4.2.2.    was done for the improper purpose of gaining an advantage for Crown and ultimately himself and the Second Defendant; and

4.2.3.    resulted in the First Defendant:

4.2.3.1.    gaining an advantage for Crown and ultimately himself and the Second Defendant; and

4.2.3.2.    causing detriment to ACBF Plans,

4.3.    by reason of the circumstances in 4.1 and 4.2 above, the First Defendant:

4.3.1.    failed to exercise his powers and discharge his duties in good faith in the best interests of any of ACBF Plans and for a proper purpose, and as a result contravened s 181(1) of the Corporations Act; and

4.3.2.    used his position contrary to and in contravention of s 182(1) of the Corporations Act.

5.    Under s 1317E(1) of the Corporations Act that, in his capacity as a director of Community Funeral Plans Pty Ltd (ACBF Community) between 4 September 2017 and 30 November 2018, the First Defendant:

5.1.    failed to consider properly or at all the effect of the Crown arrangements on the financial position of ACBF Community;

5.2.    failed to consider properly or at all whether continuing the policy with Crown was in the best interests of ACBF Community and its fund members;

5.3.    failed to consider properly or at all whether there were alternative options to available to ACBF Community that would have been in the best interests of ACBF Community and its fund members;

5.4.    failed to pursue properly or at all any alternative options available to ACBF Community;

5.5.    preferred his, the Second Defendant’s and Crown’s financial interests in causing ACBF Community to maintain its Crown arrangements;

and by reason of the above:

5.6.    failed to discharge his duties to ACBF Community with the degree of care and diligence that a reasonable person would exercise, if they were a director or officer of a corporation in ACBF Community’s circumstances, and occupied the offices held by the First Defendant, and had the same responsibilities within the corporation; and

5.7.    as a result, breached s 180(1) of the Corporations Act.

6.    Under s 1317E(1) of the Corporations Act that, in his capacity as a director of ACBF Community, between 4 September 2017 and 30 November 2018:

6.1.    the First Defendant:

6.1.1.    had a material personal interest in the Crown policy held by ACBF Community;

6.1.2.    caused ACBF Community to maintain the arrangements with Crown without taking any or all necessary steps to consider and pursue the alternative options available to ACBF Community;

6.1.3.    failed to take all necessary steps to manage the conflict of interest that arose between his and the Second Defendant’s duties to ACBF Community and his and the Second Defendant’s interest in Crown;

6.1.4.    used his position as a director or officer of ACBF Community to:

6.1.4.1.    obtain an advantage for Crown and ultimately himself and the Second Defendant; and

6.1.4.2.    cause a detriment to ACBF Community,

6.2.    the First Defendant’s conduct referred to in 6.1 above:

6.2.1.    was not in good faith in the best interests of ACBF Community;

6.2.2.    was done for the improper purpose of gaining an advantage for Crown and ultimately himself and the Second Defendant; and

6.2.3.    resulted in the First Defendant:

6.2.3.1.    gaining an advantage for Crown and ultimately himself and the Second Defendant; and

6.2.3.2.    causing detriment to ACBF Community,

6.3.    by reason of the circumstances in 6.1 and 6.2 above, the First Defendant:

6.3.1.    failed to exercise his powers and discharge his duties in good faith in the best interests of any of ACBF Community and for a proper purpose, and as a result contravened s 181(1) of the Corporations Act; and

6.3.2.    used his position contrary to and in contravention of s 182(1) of the Corporations Act.

THE COURT ORDERS THAT

7.    An order under s 1317G(1) of the Corporations Act that, within 90 days of the order, First Defendant pay to the Commonwealth of Australia a pecuniary penalty of $250,000 for contraventions of ss 180(1), 181(1) and 182(1) of the Corporations Act relating to ACBF 2, ACBF Plans and ACBF Community.

8.    An order under s 206C(1)(a)(i) and/or s 206E(1)(a)(ii) of the Corporations Act disqualifying First Defendant from managing corporations for 15 years.

9.    An order that the First Defendant pay a contribution of $50,000 to the Plaintiff’s costs of and incidental to the proceeding.

Schedule

FEDERAL COURT OF AUSTRALIA

DISTRICT REGISTRY: NEW SOUTH WALES

Division: General    No NSD 935 of 2023

Date: Click here to enter text.

ANNEXURE 2

Form 1

Rule 2.13(2)

JOINT SUBMISSIONS
OF ASIC AND FIRST DEFENDANT

FEDERAL COURT OF AUSTRALIA

DISTRICT REGISTRY: NEW SOUTH WALES

DIVISION: General    NO NSD 935 OF 2023

A    INTRODUCTION    53

B    THE CONTRAVENING CONDUCT    54

B1.    Factual background    54

ACBF business    54

Operation of the Funds    54

Crown arrangements    56

Mr Pattenden’s role    58

Other defendants    58

Premium increase for ACBF 2    59

Effect of the premium increase on ACBF 2    60

Effect of increase    60

Options available to ACBF 2    61

Effect of the premium increase on ACBF Plans and ACBF Community    62

Effect of the increase    62

Options available to ACBF Plans and ACBF Community    63

B2.    Section 180    63

Principles    63

Contraventions – ACBF 2    65

Contravention – ACBF Plans    67

Contravention – ACBF Community    69

B3.    Sections 181(1) and 182(1)    71

Principles – s 181    71

Principles – s 182    72

Contraventions – ACBF 2    73

Contravention – ACBF Plans    74

Contravention – ACBF Community    75

C    DECLARATIONS    76

D    DISQUALIFICATION ORDERS    76

D1.    Relevant provisions    76

D2.    Principles    76

E    Pecuniary penalties    78

E1.    Relevant provisions    78

E2.    Agreed penalty    79

E3.    Principles on penalty assessment    81

F    APPLICATION    82

G    COSTS AND OTHER ORDERS    86

A    INTRODUCTION

1.    These submissions are jointly filed by the Plaintiff (ASIC) and the First Defendant (Mr Pattenden).

2.    Between 4 September 2017 and 30 November 2018 (Relevant Period), Mr Pattenden was a director of ACBF 2, ACBF Plans and ACBF Community (collectively, the ACBF Entities), which operated funeral funds mostly marketed to Indigenous consumers, and a director of a Vanuatuan company Crown Insurance Services Limited (Crown), which underwrote the funds operated by the ACBF Entities (being Fund 2, Fund 3 and Fund 4 respectively).

3.    On 4 September 2017, Crown doubled the premium payable by ACBF 2. This had a significant negative impact on ACBF 2, and demonstrated the vulnerability of ACBF Plans and ACBF Community to price increases by Crown.

4.    Mr Pattenden admits that, during the Relevant Period, in contravention of s 180(1) of the Corporations Act 2001 (Cth) (Corporations Act):

4.1.    he failed to consider the effect of the Crown insurance policies on the financial position of the Funds, to consider whether the Crown policies were in the best interests of members of the Funds and to consider or pursue alternatives to the insurance arrangements with Crown (including whether to renegotiate or cancel the policy and find a new insurer, or wind up the Funds);

4.2.    he preferred his, Crown’s and another director of the ACBF Entities and Crown, Mr Law’s, interests in causing the ACBF Entities to maintain the Crown policies, causing or allowing ACBF 2 to accept or agree to pay the increased premium and failed to ensure that ACBF 2, as trustee of Fund 2, took all necessary and reasonable steps to protect the Fund contrary to the trust deed.

5.    Mr Pattenden also admits that, during the Relevant Period, in contravention of ss 181(1) and 182(1) of the Corporations Act, he failed to take all necessary steps to manage the conflict of interest that arose between his and Mr Law’s duties to the ACBF Entities and his and Mr Law’s interest in Crown, used his position as an officer of the ACBF Entities to obtain an advantage for Crown and ultimately himself and Mr Law, and caused a detriment to the ACBF Entities.

6.    The parties have filed a Statement of Agreed Facts and Admissions on 30 January 2026 (SAFA). Annexure A to the SAFA set out the Agreed Proposed Orders, which seek:

6.1.    six declarations under s 1317E(1) of the Corporations Act;

6.2.    a pecuniary penalty of $250,000 under s 1317G(1) of the Corporations Act;

6.3.    a disqualification order under s 206C(1)(a)(i) and/or s 206E(1)(a)(ii) of the Corporations Act that Mr Pattenden be disqualified from managing corporations for a period of 15 years; and

6.4.    an order that Mr Pattenden pay $50,000 as a contribution towards ASIC’s costs of and incidental to the proceeding.

B    THE CONTRAVENING CONDUCT

B1.    Factual background

ACBF business

7.    The ACBF business was a single business with common management across each of the entities within that business. Mr Pattenden was the founder and, including during the Relevant Period, was responsible for overseeing the operation of and any significant decision relating to the ACBF group of companies and business.0F2

8.    The ACBF group of companies relevantly included: ACBF 1, ACBF 2, ACBF Plans, ACBF Community, ACBF Consultants Pty Ltd, ACBF Group Holdings and ACBF Administration.1F3

9.    In the period from 2010 to 30 November 2018, the ultimate holding company of the ACBF group of companies through which the ACBF business operated was ACBF Group Holdings. Just Solutions Limited (Just Solutions), a company registered in Vanuatu, owned the majority of the shares in ACBF Group Holdings.2F4

Operation of the Funds

10.    The SAFA explains in detail the way in which the Funds of each of the ACBF Entities operated.3F5

11.    In summary, for Fund 2:

11.1.    ACBF 2 was trustee of Fund 2, which operated as a trust established by deed.4F6

11.2.    ACBF 2 operated Fund 2 from 1993 for the purpose of providing funeral benefits to nominated persons on the death of a fund member. Fund 2 was marketed, and only available, to Indigenous Australians. Fund 2 was closed to new members from 2004.5F7

11.3.    On the death of the fund member who had made at least 2 payments, and following the making of a claim to ACBF 2, ACBF 2 would pay $6,000 to a nominated person (subject to any increase of the amount to be paid, made on application by a member after paying contribution amounts for at least one year).6F8

11.4.    Where a fund member wrote to ACBF to cancel their membership, they would receive a payment on cancellation subject to having made 26 or more payments and having not increased the amount payable by ACBF 2, in an amount equal to one third of the member’s total membership payments from the 26th payment onwards.7F9

11.5.    Where Fund 2 was wound up and there were surplus funds following the payment of Fund 2’s debts and liabilities, eligible fund members would be entitled to be repaid an amount up to the maximum amount of their cancellation benefit.8F10

11.6.    The trust deed for Fund 2:

11.6.1.    required Fund 2 to maintain an insurance policy to underwrite the lives of its fund members. From 2002, ACBF 2 used Crown as its underwriter;9F11

11.6.2.    provided ACBF 2 with the power to take such action as it thought fit for the adequate protection of any part or parts of the Fund;10F12

11.6.3.    could not be amended except in accordance with the provisions of the trust deed, and could be amended on application under s 81 of the Trustees Act 1925 (NSW) by ACBF 2 to the Court.11F13

11.7.    On 24 November 2021, ACBF 2 went into administration.12F14

11.8.    On 2 March 2022, a liquidator was appointed to ACBF 2. On 11 April 2022, a receiver was appointed to Fund 2.13F15

12.    In summary, for Funds 3 and 4:

12.1.    Both were subject to plan rules and were registered as a contributory funeral benefit business under the Funeral Funds Act 1979 (NSW) (Funeral Funds Act).14F16

12.2.    ACBF Plans operated Fund 3 from 2005 for the purpose of providing funeral benefits to nominated persons on the death of a fund member, and was marketed to, and until September 2017 was only available to, Indigenous Australians.15F17

12.3.    ACBF Community operated Fund 4 from 2005 for the purpose of providing funeral benefits to nominated persons on the death of a fund member, and was marketed to non-Indigenous Australians.16F18

12.4.    On the death of a nominated person (including a fund member) and following the making of a claim to ACBF Plans or ACBF Community, ACBF Plans or ACBF Community would pay an amount comprising reimbursement for incurred funeral-related expenses (up to the nominated benefit amount) to or as directed by the nominated payee, calculated in accordance with the application form.17F19

12.5.    The rules and application form did not provide members with a cancellation payment on cancellation of their membership.18F20

12.6.    The plan rules for Funds 3 and 4 required that:

12.6.1.    the plan rules could not be amended except in accordance with the provisions of the plan rules;19F21

12.6.2.    ACBF Plans and ACBF Community must at all times maintain an insurance policy that underwrites the amounts required to be paid following a claim on the death of a nominee.20F22

12.7.    On 11 March 2022, ACBF Plans and ACBF Community entered liquidation.21F23

Crown arrangements

13.    The SAFA explains in detail the way in which the Crown arrangements with each of the ACBF Entities operated.22F24

14.    Between 2002 and at least 30 November 2018, ACBF 2, ACBF Plans and ACBF Community chose to satisfy the requirement to maintain an insurance policy by insuring with Crown.23F25

15.    Crown:24F26

15.1.    was registered in Vanuatu by Mr Pattenden in 2002;

15.2.    provided insurance services to the ACBF Entities from 2002;

15.3.    between 2002 and 30 November 2018, operated its business from Vanuatu; and

15.4.    between 2002 and 30 November 2018, was not subject to prudential or other regulatory requirements in Australia.

16.    Between 2002 and 15 February 2022, the ACBF Entities were the only entities insured by Crown.25F27

17.    Under the terms of the policies with Crown:26F28

17.1.    the ACBF Entities were required to pay premiums to Crown (cl 9.1);

17.2.    on the death of a fund member or other nominee (as relevant), Crown was required to pay the relevant ACBF Entity the relevant sum insured (cl 8.2);

17.3.    Crown had the power to vary the premium by giving the ACBF Entity three months’ written notice (cl 9.5.1 for ACBF 2 and cl 9.5 for ACBF Plans and ACBF Community);

17.4.    the policies were renewable annually at the expiry of the policy year, being the 12 months between annual review dates;

17.5.    there was no obligation on Crown to renew the policies at the annual review date;

17.6.    Crown and the ACBF Entities had a profit-sharing arrangement in accordance with a self-participation formula; and

17.7.    Crown was not required to provide services to the ACBF Entities other than the payment of claims by fund members.

18.    From 2003 (for Fund 2) or 2005 (for Funds 3 and 4) to at least 2018, Crown paid to each of Funds 2, 3 and 4 a ‘profit share’ based on a formula set out in the Group Insurance Policy entered into between each of ACBF 2, ACBF Plans, ACBF Community and Crown as varied from time to time.27F29 The tables at paragraph 45, 47 and 49 of the SAFA set out for financial years 2002 to 2018 for Fund 2 and financial years 2005 to 2018 for Funds 3 and 4 respectively the premiums received by Crown, claims paid by Crown, profit share paid by Crown and the net premiums, less claims and profit share, paid to Crown.28F30

19.    In each financial year prior to financial year 2017, Crown received more in premiums from Fund 2 than it paid to Fund 2 for claims and profit share. In financial year 2017, Crown paid more to Fund 2 in claims and profit share than it received in premiums from Fund 2.29F31

20.    As set out in more detail below, on 4 September 2017 Crown doubled the premiums payable by Fund 2 with effect from 1 August 2017, the result of which was that for financial year 2018 Crown received more in premiums from Fund 2 than it paid in claims.30F32

21.    In total, for financial years 2002 to 2018 and to 30 November 2018, for Fund 2:31F33

21.1.    Crown received $16,345,137 in premiums;

21.2.    Crown paid $8,056,029 in claims;

21.3.    Crown paid $2,266,816 in profit share; and

21.4.    Crown’s net premiums received less claims and profit share was $6,022,292.

22.    Between 1 July 2005 and 30 November 2018:

22.1.    ACBF Plans paid Crown total premiums of approximately $22.6 million, approximately $7.5 million was paid by Crown by way of fund members’ claims and approximately $4.5 million was returned to ACBF Plans by way of profit-sharing payment;32F34 and

22.2.    ACBF Community paid Crown total premiums of approximately $788,000, approximately $265,000 was paid by Crown by way of fund members’ claims and approximately $240,000 was returned to ACBF Community by way of profit-sharing payment.33F35

Mr Pattenden’s role

23.    During the period April 2002 to 30 November 2018, Mr Pattenden:

23.1.    was an appointed director of each of the ACBF Entities at various times for various periods (and had some periods where he was not a director), and was a director of each for the entirety of the Relevant Period; 34F36

23.2.    was responsible for overseeing the operation of and any significant decision relating to the ACBF business and the ACBF Entities;35F37

23.3.    until October 2017, predominantly acted in the role of a chief executive officer or managing director of the ACBF business and the ACBF Entities;36F38

23.4.    was the founder, a director and (indirectly) the majority shareholder of Crown;37F39 and

23.5.    indirectly, the majority shareholder of Just Solutions.38F40

24.    On 30 November 2018, Just Solutions and ACBF Consultants Pty Ltd sold their shares in ACBF Group Holdings to Elah Valley Pty Ltd (Elah Valley). The Fourth Defendant (Mr Jones) and the Fifth Defendant (Mr Clayton) were the only directors and acquired ownership interests in ACBF Group Holdings through Elah Valley.39F41

Other defendants

25.    The other defendants in the proceeding are Mr Law, the Third Defendant (Mr Wilson), Mr Jones and Mr Clayton. Each was a director of the ACBF Entities at various times, and for various periods of time, during the Relevant Period.40F42

26.    Mr Law was also a director of Crown (from 2008 until at least 30 November 2018),41F43 indirectly the minority shareholder of Just Solutions through his company Asian Markets Limited42F44 and a beneficial owner of shares in Crown from January 2008.43F45

27.    As set out in the SAFA, during the Relevant Period, as applicable, each of Mr Law, Mr Wilson, Mr Jones and Mr Clayton acted in accordance with Mr Pattenden’s instructions in relation to, and deferred to Mr Pattenden for overseeing the operation of and any significant decision in relation to, the ACBF Entities.44F46

Premium increase for ACBF 2

28.    On 4 September 2017, Mr Pattenden told Mr Law that the premiums that ACBF 2 paid to Crown under the insurance arrangements would double.45F47 The context around that decision is set out in paragraphs 61 to 78 of the SAFA and can be summarised as follows.

29.    Each month in 2017, Mr Pattenden would receive an email (from Mr Wilson or others) with details about the premiums paid by each of the Funds to Crown, claims received by the relevant Fund and payable by Crown, and the amount of profit share payable by Crown.46F48 In the email sent by Mr Wilson on 1 March 2017, he noted to Mr Pattenden that “I know you will be bitterly disappointed in these …”.47F49

30.    On a date prior to 10 March 2017, Mr Pattenden informed Mr Wilson that the premiums to be paid by ACBF 2 to Crown would be doubled.48F50 Mr Wilson sent an email to Mr Hughes (a solicitor for Mr Pattenden and the ACBF business), copied to Mr Pattenden, regarding the doubling of the premiums for ACBF 2.49F51 Mr Wilson stated “If we are to double these premiums, going on 2016 figures, it will make a loss of around $360k. This could pose problems of insolvent trading. Is this just a short term measure in hope that we can get all fund members over to plans asap?”

31.    No action was taken to double premiums between March to August 2017.50F52 On 30 June 2017, Mr Wilson sent the monthly spreadsheets to Mr Pattenden and Mr Hughes (a solicitor for Mr Pattenden and the ACBF business) stating “they look horrible” and also stated “Fund 2 is terrible after claims of Feb 1, March 1, April 2, May 4, we have 8 claims for June, albeit 5 of those were late May deaths.”51F53 The spreadsheet for Fund 2 attached to the email indicated that for June 2017, it was estimated that Crown would receive a payment from Fund 2 of $44,707.60 and need to pay back to Fund 2 $103,000, resulting in a loss to Crown for June 2017 of $58,292.52F54

32.    On or around 4 September 2017, Mr Pattenden called Mr Law and told him that Crown would double the premium payable by Fund 2, and instructed Mr Law to draft a letter from Crown to Fund 2 informing it of this.53F55 Mr Law drafted a letter and sent a copy to Mr Wilson in an email at 1:09pm on 4 September 2017, copying Mr Pattenden, and stated that the decision to increase premiums by 100% was being made “due to payer higher risk factors”, to be signed by Mr Pattenden on behalf of Crown.54F56

33.    At 1:26pm on 4 September 2017, Mr Wilson responded to the email described at paragraph 32 above stating that the “wording is fine” and that “Ron would probably ask you to sign this”.55F57

34.    Mr Law proceeded to finalise the letter and sent it to Mr Wilson at 1:57pm on 4 September 2017, copied to Mr Pattenden.56F58

35.    At 2:23pm on 4 September 2017, Mr Wilson sent an email to Mr Pattenden copied to Mr Hughes which attached the payout amount if all Fund 2 members cancelled as of 31 August 2017.57F59 At 4:54pm, Mr Hughes responded to this email, copying Mr Pattenden, saying that Crown was “clearly not in a position to maintain the existing premium structure with Fund 2” recommending that “Crown immediately increase premiums to remain viable. That increase can be met from the reserve held for the cancellation payments. It is a matter for discussion between Crown and Fund 2 as to how much the premiums should increase. I suggest quotes be obtained as well as a back payment for reduced premiums paid in the past. I have no doubt that Crown is significantly undercharging Fund 2”.58F60

36.    On 5 September 2017, Mr Wilson forwarded to Mr Hughes the 4 September letter confirming that the increase had been agreed between Crown and ACBF 2.59F61 Mr Hughes replied that day asking whether it was Fund 2 that was paying the increased premiums and not the fund members, which Mr Wilson confirmed was correct.60F62

37.    On 6 September 2017, Mr Pattenden replied to Mr Hughes’ email at paragraph 35 above that the premiums for ACBF 2 had been doubled “due to much higher risk factor I think this will help”.61F63

38.    On 6 September 2017, Mr Wilson sent a letter to Crown confirming the amount paid by ACBF 2 in premiums for August 2017 incorporating the doubled premium.62F64

Effect of the premium increase on ACBF 2

Effect of increase

39.    The premium increase had a significant negative effect on the financial position of ACBF 2. ACBF 2 went from an operating profit of $9,794 for the financial year ending 30 June 2017 to an operating loss of $198,779 for the financial year ending 30 June 2018.63F65

40.    This occurred in circumstances where, as noted at paragraph 11.2 above, Fund 2 was closed to new members in 2004 and where ACBF 2 could not increase its revenue from member contributions without altering the terms of the trust deed (which required the written consent of 75% of fund members or an application to the court to vary the trust deed).64F66 The effect of these matters is that ACBF 2 could not unilaterally increase its revenue from member contributions, and was not gaining any new members (instead the member numbers were declining over time).

41.    Further, ACBF 2 was not accumulating, or attempting to accumulate, amounts from which to pay claims by fund members.65F67 Apart from the cash reserves that ACBF 2 maintained for the purpose of meeting its potential liability to pay cancellation benefits to fund members, which liability was not insured under the policy with Crown,66F68 ACBF 2 did not otherwise maintain cash reserves for the purpose of paying fund members’ claims. Instead, it relied on the policy with Crown for this purpose, and had no alternative source of funds to pay member claims.67F69

42.    Once the premium paid by ACBF 2 was doubled, its projected cash position went from remaining positive indefinitely to $0 within four years.68F70

43.    If ACBF 2 had been brought to an end, it would have had amounts available to pay creditors or fund members eligible for cancellation benefits.69F71 If ACBF 2 had been wound up, there would have been surplus funds following the payment of debts and liabilities for eligible fund members (approximately 10% of the fund members) to be repaid an amount up to the maximum amount of their cancellation benefit.70F72 Any further surplus remaining after those payments were to be paid to the “Aboriginal Childrens Advancement Society” or if that charity no longer existed “some other charity with substantially similar objects as previously approved in writing by Crown”.71F73

44.    At the time of the premium increase and continuing until 30 November 2018, there was a substantial risk that:72F74

44.1.    in the circumstances described in paragraphs 40 to 43 above, and paragraphs 46 to 47 below, the effect of the premium increase would be that ACBF 2 would become insolvent within approximately four or less years and would need to be wound up;

44.2.    if ACBF 2 was wound up in insolvency, ACBF 2’s policy with Crown would be terminated and eligible members of Fund 2 would not be able to recover all or part of any cancellation benefit they were owed; and

44.3.    if fund members’ cover was cancelled, they would be without funeral cover.

Options available to ACBF 2

45.    In the Relevant Period, Mr Pattenden failed to consider properly or at all any alternatives to the premium increase or the arrangement with Crown.

46.    Had Mr Pattenden done so, he would have identified the options that Fund 2 had available to it rather than continuing the insurance arrangement with Crown. In particular, Fund 2’s options were:73F75

46.1.    accepting the Crown higher premium rates but with mitigation by attempting to increase contribution rates or negotiating lower administration fees; and

46.2.    negotiating and agreeing alternative terms with Crown;

46.3.    attempting to find an alternative insurer;

46.4.    moving to a self-insurance arrangement; and

46.5.    winding up.

47.    If calculations were performed at the time of the premium increase on 4 September 2017 by Mr Pattenden, the result of those calculations would have been:74F76

47.1.    ACBF 2 could have withstood a 33% premium increase by Crown and remained solvent for 15 years.

47.2.    ACBF 2 could have accepted the Crown premium increase and remained solvent considerably longer if administration fees could be reduced and contributions increased.

47.3.    ACBF 2 could have self-insured and remained solvent for seven years, and for considerably longer if administration fees could be reduced and contributions increased.

47.4.    If ACBF 2 had been wound up, it would have sufficient funds to pay out all cancellation benefits.

48.    Mr Pattenden ought to have known the fact described at paragraph 44.1 above because it would have been revealed had he asked for analysis to be undertaken of the effect of the 100% premium increase on ACBF 2’s financial position, which he did not do but ought to have done.75F77

Effect of the premium increase on ACBF Plans and ACBF Community

Effect of the increase

49.    The premium increase for ACBF 2 revealed vulnerabilities in the Crown arrangements in respect of ACBF Plans and ACBF Community.

50.    This was that ACBF Plans and ACBF Community were also vulnerable to unaffordable premium increases by Crown because they were also not accumulating, or attempting to accumulate, amounts from which to pay claims by fund members.76F78 They were entirely dependent on the insurance arrangement with Crown to pay claims made by members as they had no alternative source of funds to pay member claims.77F79

51.    This was so in circumstances where under the insurance policies with Crown, Crown had the right to increase the premium payable by ACBF Plans and ACBF Community.78F80

52.    Accordingly, if Crown had increased premiums during the Relevant Period, whether by doubling those premiums as it had done for ACBF 2 or by increasing the premiums at all, the effect of the premium increase would be, in each case, that ACBF Plans and ACBF Community would immediately become insolvent.79F81

53.    Had ACBF Plans and ACBF Community been permitted to self-insure, and had done so, both could have remained solvent indefinitely.80F82 Further, in these circumstances if ACBF Plans and ACBF Community had been brought to an end, both would have had amounts available to pay creditors or fund members.81F83

54.    Mr Pattenden ought to have known the facts described at paragraphs 50 to 53 above because it would have been revealed to him had he asked for analysis to be undertaken of the relationship between Crown’s premiums and ACBF Plans’ and ACBF Community’s financial positions, which he did not do but ought to have done.82F84

55.    If ACBF Plans and ACBF Community were wound up in insolvency, their respective fund members’ cover would be cancelled and they would be without funeral cover.83F85

Options available to ACBF Plans and ACBF Community

56.    Funds 3 and 4 had options available to it in lieu of continuing the Crown arrangements, namely:84F86

56.1.    negotiating and agreeing alternative terms with Crown;

56.2.    attempting to find an alternative insurer;

56.3.    subject to any regulatory approval, moving to a self-insurance arrangement;

56.4.    negotiating lower administration fees;

56.5.    attempting to increase contribution rates; and

56.6.    winding up.

B2.    Section 180

Principles

57.    Section 180(1) of the Corporations Act provides:

(1)    A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they:

(a)    were a director or officer of a corporation in the corporation’s circumstances; and

(b)    occupied the office held by, and had the same responsibilities within the corporation as, the director or officer.

58.    The degree of care and diligence that is required by s 180(1) is fixed as an objective standard identified by reference to the two relevant elements – (a) “the corporation’s circumstances” and (b) the office and responsibilities within the corporation that the officer in question occupied and had.85F87 This objective standard requires the court to consider what an ordinary person, with the knowledge and experience of the defendant, must be expected to have done in the circumstances if he or she was acting on his or her own behalf.86F88

59.    In relation to the circumstances of the company, this includes: the type of company; the provisions of its constitution; the size and nature of the company’s business; the composition of the board.87F89

60.    In considering the acts or omissions of a particular director, the Court will consider factors including the director’s position and responsibilities, the director’s experience and skills, the terms and conditions on which he had undertaken to act as a director, how the responsibility for the company’s business has been distributed between the directors and the company’s employees, the informational flows and systems in place and the reporting systems and requirements within the company.88F90

61.    The word “responsibilities” in s 180(1) directs attention to the factual arrangements operating within the company and affecting the director or officer in question, as opposed to the legal duty of care arising in particular circumstances. The director’s responsibilities are not confined to statutory responsibilities and include whatever responsibilities the officer concerned had within the corporation, regardless of how or why those responsibilities came to be imposed on that officer.89F91 It does not refer to only specific tasks delegated to the relevant director or officer by the corporate constitution or a board or members’ resolution or otherwise. It is a wider concept referring to the acquisition of responsibilities not only through specific delegation, but also through the way in which work is in fact distributed within the corporation and the expectations placed by those arrangements on the shoulders of the individual director or officer.90F92

62.    Directors and officers are required to take reasonable steps to place themselves in a position to guide and monitor the management of the company.91F93 A director or officer should become familiar with the fundamentals of the business in which the corporation is engaged, and he or she is under a continuing obligation to keep informed about the activities of the corporation.92F94

63.    In order for an act or omission of the director to be capable of constituting a contravention of s 180, there must be reasonably foreseeable harm to the interests of the company caused thereby.93F95 The reference to “harm” is best understood as “referencing harm to any of the interests of the corporation”; it is not confined to financial harm.94F96

64.    Accordingly, relevant to the question of breach of duty is the balance between the foreseeable risk of harm to the company flowing from the contravention on the one hand, and on the other the potential benefits that could reasonably be expected to have accrued to the company from that conduct.95F97 Not only must the court consider the nature and magnitude of the foreseeable risk of harm and degree of probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action, but the court must balance the foreseeable risk of harm against the potential benefits that could reasonably be expected to accrue from the conduct in question.96F98 Such a question is to be answered having close regard to the “circumstances existing at the relevant time, without the benefit of hindsight, and with the distinction between negligence and mistakes or errors of judgment firmly in mind”.97F99

65.    Where there is a transaction involving the potential for conflict between interest and duty, the duty of care and diligence falls to be exercised in a context requiring special vigilance, calling for scrupulous concern on the part of those officers who become aware of that transaction to ensure that any necessary corporate approvals are obtained and safeguards are put in place.98F100

Contraventions – ACBF 2

66.    Section 180(1) applies to Mr Pattenden as during the Relevant Period:

66.1.    he was a director of each of the ACBF Entities;99F101

66.2.    he was responsible for overseeing the operation of and any significant decision relating to the ACBF business and the ACBF Entities;100F102 and

66.3.    each of Mr Law, Mr Wilson, Mr Jones and Mr Clayton:101F103

66.3.1.    acted in accordance with Mr Pattenden’s instructions in relation to ACBF 2; and

66.3.2.    deferred to Mr Pattenden for overseeing the operation of and any significant decision relating to ACBF 2.

67.    This was so in circumstances where, during the Relevant Period, Mr Pattenden:102F104

67.1.    with Mr Law were the ultimate co-owners and co-controllers of Crown, had a direct or indirect financial interest in Crown, and benefitted financially from ACBF 2 insuring with Crown;

67.2.    knew that if the premiums paid by ACBF 2 to Crown were to double from the amount paid by ACBF 2 before the Relevant Period, then there was a risk for ACBF 2 that it would become insolvent;

67.3.    knew that on 4 July 2017 that for at least some members of Fund 2, who were getting older, the payouts per member were $15,000, and that this was hurting Crown’s financial position at that time;

67.4.    knew that on 4 September 2017, he, Mr Law and Mr Wilson had agreed that the premium paid by ACBF 2 to Crown would increase by 100% effective from 1 August 2017 at Mr Pattenden’s direction;

67.5.    knew that ACBF 2 paid Crown premiums in amounts that were double the amount of the premium that had previously been paid;

67.6.    knew or ought to have known that an increase in premium of 100% would have a significant negative impact on ACBF 2’s financial position;

67.7.    ought to have known that the effect of the premium increase would be that ACBF 2 would become insolvent within approximately four or less years and would need to be wound up;

67.8.    ought to have known that there was a substantial risk that if ACBF 2 was wound up in insolvency, the remaining members of Fund 2:

67.8.1.    would not be able to recover all or part of any cancellation benefit they were entitled; and

67.8.2.    would be without funeral cover;

67.9.    knew or ought to have known that ACBF 2 maintained its policy with Crown at the increased premium; and

67.10.    by causing ACBF 2 to maintain its policy with Crown at the increased premium, he and Mr Law (through Crown) benefitted financially from ACBF 2 continuing to pay premiums.

68.    A reasonable director or officer of a corporation in ACBF 2’s circumstances and who occupied the office held by Mr Pattenden and had the same responsibilities, and who had knowledge of the risks to ACBF 2 and its fund members referred to in paragraph 67 above, in acting with care and diligence when considering whether:103F105

68.1.    to pay the increased premium to Crown on behalf of ACBF 2; and

68.2.    to continue to maintain ACBF 2’s policy with Crown,

would have taken all necessary steps to:

68.3.    consider whether the Crown policy was in the interests of ACBF 2, both generally and at the time of the doubling of ACBF 2’s premium;

68.4.    pursue alternatives to ACBF 2’s insurance arrangements with Crown, including considering whether to:

68.4.1.    renegotiate the Crown insurance policy;

68.4.2.    cancel the Crown insurance policy and transition to self-insurance (and whether and how to amend the trust deed to allow for this);

68.4.3.    attempt to find a cheaper external insurer;

68.4.4.    increase reserves from which to pay Crown; and

68.4.5.    wind up the trust and pay eligible members who were entitled to it a cancellation benefit.

69.    At all times from 4 September 2017 (the date of the decision to increase the premium) and continuing until 30 November 2018, Mr Pattenden:104F106

69.1.    failed to consider properly or at all the effect of the Crown arrangements on the financial position of ACBF 2;

69.2.    failed to consider properly or at all whether continuing the policy with Crown was in the best interests of ACBF 2 and its fund members;

69.3.    failed to consider properly or at all whether there were alternative options available to ACBF 2, as described in paragraph 68.4 above, that would have been in the best interests of ACBF 2 and its fund members;

69.4.    failed to pursue properly or at all any of the alternative options described in paragraph 68.4 above;

69.5.    preferred Crown’s and ultimately his and Mr Law’s financial interests in causing ACBF 2 to maintain its Crown arrangements;

69.6.    preferred Crown’s and ultimately his and Mr Law’s financial interests in causing or allowing ACBF 2 to accept or agree to pay the increased premium, payment of which occurred on 15 occasions between 4 September 2017 and 30 November 2018; and

69.7.    failed to ensure properly or at all that ACBF 2, as trustee for Fund 2, took all necessary and reasonable steps to protect the Fund (contrary to cl 13.9 of the trust deed).

70.    Based on the matters described in paragraph 69 above, between 4 September 2017 and 30 November 2018, Mr Pattenden:105F107

70.1.    failed to discharge his duties to ACBF 2 with the degree of care and diligence that a reasonable person would exercise, if they were a director or officer of a corporation in ACBF 2’s circumstances, and occupied the offices held by Mr Pattenden, and had the same responsibilities within the corporation; and

70.2.    as a result, breached s 180(1) of the Corporations Act.

Contravention – ACBF Plans

71.    By 4 September 2017, and until 30 November 2018, Mr Pattenden:106F108

71.1.    ought to have known that ACBF Plans was vulnerable to an increase in premiums by Crown in that the effect of any premium increase would be that ACBF Plans would immediately become insolvent;

71.2.    ought to have known that there was a substantial risk that if ACBF Plans was wound up in insolvency, the members of ACBF Plans:

71.2.1.    would have their cover cancelled; and

71.2.2.    would be without funeral cover;

71.3.    knew or ought to have known that ACBF Plans maintained its policy with Crown; and

71.4.    ought to have known that, by ACBF Plans maintaining its policy with Crown giving rise to the vulnerability described in paragraph 71.1 above:

71.4.1.    with Mr Law (through Crown) benefitted financially from ACBF Plans continuing to pay premiums; and

71.4.2.    preferred the financial interests of Crown, himself and Mr Law over the financial interests of ACBF Plans and fund members.

72.    A reasonable director or officer of a corporation in ACBF Plans’ circumstances and who occupied the office held by Mr Pattenden and had the same responsibilities, and who had knowledge of the risks to ACBF Plans and its fund members referred to in paragraph 71 above, in acting with care and diligence when considering whether to continue to maintain ACBF Plans’ policy with Crown, would have taken all necessary steps to:107F109

72.1.    consider whether the Crown policy was in the interests of ACBF Plans, both generally and at the time of the doubling of ACBF 2’s premium; and

72.2.    pursue alternatives to ACBF Plans’ insurance arrangements with Crown, including considering whether to:

72.2.1.    renegotiate the Crown insurance policy;

72.2.2.    cancel the Crown insurance policy and, subject to any regulatory approval, transition to self-insurance (and whether and how to amend the plan rules to allow for this);

72.2.3.    attempt to find a cheaper external insurer;

72.2.4.    increase reserves from which to pay Crown; and

72.2.5.    wind up the company and pay the remaining funds to members.

73.    At all times from 4 September 2017 (the date of the decision to increase the premium for ACBF 2) until 30 November 2018, Mr Pattenden:108F110

73.1.    failed to consider properly or at all the effect of the Crown arrangements on the financial position of ACBF Plans;

73.2.    failed to consider properly or at all whether continuing the policy with Crown was in the best interests of ACBF Plans and its fund members;

73.3.    failed to consider properly or at all whether there were alternative options available to ACBF Plans, as described in paragraph 72.2 above, that would have been in the best interests of ACBF Plans and its fund members;

73.4.    failed to pursue properly or at all any of the alternative options described in paragraph 72.2 above; and

73.5.    preferred Crown’s and ultimately his and Mr Law’s financial interests in causing ACBF Plans to maintain its Crown arrangements.

74.    Based on the matters described in paragraph 73 above, from 4 September 2017 until 30 November 2018, including when ACBF 2 paid the increased premium and thus presented the vulnerability for ACBF Plans described in paragraph 71.1 above, Mr Pattenden:109F111

74.1.    failed to discharge his duties to ACBF Plans with the degree of care and diligence that a reasonable person would exercise, if they were a director or officer of a corporation in ACBF Plans’ circumstances, and occupied the offices held by Mr Pattenden and had the same responsibilities within the corporation; and

74.2.    as a result, breached s 180(1) of the Corporations Act.

Contravention – ACBF Community

75.    By 4 September 2017, and until 30 November 2018, Mr Pattenden:110F112

75.1.    ought to have known that ACBF Community was vulnerable to an increase in premiums by Crown in that the effect of any premium increase would be that ACBF Community would immediately become insolvent;

75.2.    ought to have known that there was a substantial risk that if ACBF Community was wound up in insolvency, the members of ACBF Community:

75.2.1.    would have their cover cancelled; and

75.2.2.    would be without funeral cover;

75.3.    knew or ought to have known that ACBF Community maintained its policy with Crown; and

75.4.    ought to have known that, by ACBF Community maintaining its policy with Crown giving rise to the vulnerability described in paragraph 75.1 above:

75.4.1.    with Mr Law (through Crown) benefitted financially from ACBF Community continuing to pay premiums; and

75.4.2.    preferred the financial interests of Crown and ultimately himself and Mr Law over the financial interests of ACBF Community and fund members.

76.    A reasonable director or officer of a corporation in ACBF Community’s circumstances and who occupied the office held by Mr Pattenden and had the same responsibilities, and who had knowledge of the risks to ACBF Community and its fund members referred to in paragraph 75 above, in acting with care and diligence when considering whether to continue to maintain ACBF Community’s policy with Crown, would have taken all necessary steps to:111F113

76.1.    consider whether the Crown policy was in the interests of ACBF Community, both generally and at the time of the doubling of ACBF 2’s premium; and

76.2.    pursue alternatives to ACBF Community’s insurance arrangements with Crown, including considering whether to:

76.2.1.    renegotiate the Crown insurance policy;

76.2.2.    cancel the Crown insurance policy and, subject to any regulatory approval, transition to self-insurance (and whether and how to amend the plan rules to allow for this);

76.2.3.    attempt to find a cheaper external insurer;

76.2.4.    increase reserves from which to pay Crown; and

76.2.5.    wind up the company and pay the remaining funds to members.

77.    At all times from 4 September 2017 (the date of the decision to increase the premium for ACBF 2) until 30 November 2018, Mr Pattenden:112F114

77.1.    failed to consider properly or at all the effect of the Crown arrangements on the financial position of ACBF Community;

77.2.    failed to consider properly or at all whether continuing the policy with Crown was in the best interests of ACBF Community and its fund members;

77.3.    failed to consider properly or at all whether there were alternative options available to ACBF Community, as described in paragraph 76.2 above, that would have been in the best interests of ACBF Community and its fund members;

77.4.    failed to pursue properly or at all any of the alternative options described in paragraph 76.2 above; and

77.5.    preferred Crown and ultimately his own and Mr Law’s financial interests in causing ACBF Community to maintain its Crown arrangements.

78.    Based on the matters described in paragraph 77 above, from 4 September 2017 until 30 November 2018, including when ACBF 2 paid the increased premium and thus presented the vulnerability for ACBF Community described in paragraph 75.1 above, Mr Pattenden:113F115

78.1.    failed to discharge his duties to ACBF Community with the degree of care and diligence that a reasonable person would exercise, if they were a director or officer of a corporation in ACBF Community’s circumstances, and occupied the offices held by Mr Pattenden and had the same responsibilities within the corporation; and

78.2.    as a result, breached s 180(1) of the Corporations Act.

B3.    Sections 181(1) and 182(1)

Principles – s 181

79.    Section 181(1) of the Corporations Act provides as follows:

A director or other officer of a corporation must exercise their powers and discharge their duties:

(a)    in good faith in the best interests of the corporation; and

(b)    for a proper purpose.

80.    The requirements of a duty to act in good faith include that the officer must (a) exercise their powers in the interests of the company; (b) not misuse or abuse their power; (c) avoid conflict between their personal interests and those of the company; (d) not take advantage of their position to make secret profits; and (e) not misappropriate the company’s assets for themselves.114F116

81.    The case law remains unsettled as to whether establishing a contravention of s 181(1)(a) requires establishing that a director engaged deliberately in conduct which he or she knew was not in the company’s best interests or whether it is determined objectively, involving an assessment by the court of what is reasonable in the circumstances.115F117 There is a distinction between dishonesty and an absence of good faith.116F118

82.    It is nevertheless well established that an allegation of breach involves both subjective and objective elements: subjective in the enquiry as to the director’s subjective purpose, and objective in the assessment of whether that purpose was improper.117F119

83.    In respect of s 181(1)(b), directors must exercise their powers for the purpose for which they were conferred, and not for any collateral or improper purpose.118F120 See paragraph 88 below for further discussion of improper purpose.

84.    In considering whether s 181(1) has been breached, the court (as with s 180(1)) seeks to balance “the foreseeable risk of harm against the potential benefits that could reasonably have been expected to accrue to the company from the conduct in question”.119F121

Principles – s 182

85.    Section 182(1) provides as follows:

A director, secretary, other officer or employee of a corporation must not improperly use their position to:

(a)    gain an advantage for themselves or someone else; or

(b)    cause detriment to the corporation.

86.    In order to prove a contravention of s 182(1), the following must be established: (a) that the officer “used” the position he or she held as an officer; (b) such use was improper; and (c) such conduct was for the purpose of gaining an advantage or to cause a detriment to the company.120F122

87.    The test of whether conduct is improper is objective,121F123 and looks at the character of the conduct of the director in question.122F124 The relevant conduct would be improper if it amounted to a breach of the standards of conduct that would be expected of a person in the officer’s position by reasonable persons with knowledge of the duties, powers and authority of his or her position as an officer and the circumstances of the case, including the commercial context.123F125 In a practical sense, the inquiry is whether the defendant’s behaviour breached the norms of conduct thought necessary for the proper conduct of commercial life.124F126

88.    The prohibition against making improper use of a director’s position is a reference to the purpose of the conduct, and not the effect.125F127 A director will act for an improper purpose if the substantial purpose for the director’s conduct was improper.126F128 A director can make improper use of his or her position even if the director has the purpose or intention or belief that the conduct is in the interests of the company.127F129

89.    A contravention of s 182(1) will be established if the defendant made improper use of his position for the purpose of gaining an advantage for himself or for some other person.128F130 It is not necessary to show that the conduct brought about that advantage.129F131

90.    Further, a director may act improperly with no intention of acting dishonestly or otherwise than in the best interests of the company as a whole. Where a director does something by the use of his position that is for an impermissible purpose, it will amount to an improper use of that position, even if the director honestly believes it to be in the interests of the company and where there was no personal advantage for the director.130F132 That is, a director cannot escape a finding of improper use of position merely because he or she believed what he or she was doing was in the interests of the corporation.131F133

91.    A director can act with a personal interest where the director has not freed their mind of that personal interest, provided that the director’s personal interest was not the “actuating motive” rather than some bona fide concern for the benefit of the company.132F134 Where a director’s conduct is attributable to a range of different purposes, the “but for” test is ordinarily used to determine what the relevant purpose was, consideration being given to whether the director would still have acted in that way if the collateral purpose had not existed.133F135

Contraventions – ACBF 2

92.    By reason of the matters described in paragraph 67 above, and Mr Pattenden’s positions within the ACBF business as set out in paragraph 23 above, Mr Pattenden:134F136

92.1.    caused ACBF 2 to maintain the arrangements with Crown from 4 September 2017 until 30 November 2018 without taking any or all necessary steps to consider and pursue the matters in paragraph 68.4 above;

92.2.    caused ACBF 2 to pay an increase in premium of 100% without taking any or all necessary steps to consider and pursue the matters in paragraph 68.4 above; and

92.3.    failed to take all necessary steps to manage the conflict of interest that arose between his and Mr Law’s duties to ACBF 2 and his and Mr Law’s interest in Crown;

92.4.    used his position as a director or officer of ACBF 2 to:

92.4.1.    obtain an advantage for Crown and ultimately himself and Mr Law; and

92.4.2.    cause a detriment to ACBF 2.

93.    Mr Pattenden’s conduct referred to in paragraph 92 above:135F137

93.1.    was not in good faith in the best interests of ACBF 2;

93.2.    was done for the improper purpose of gaining an advantage for Crown and ultimately himself and Mr Law; and

93.3.    resulted in Mr Pattenden:

93.3.1.    gaining an advantage for Crown and ultimately himself and Mr Law; and

93.3.2.    causing detriment to ACBF 2.

94.    For each of the acts or omissions described in paragraphs 92 and 93 above, between 4 September 2017 and 30 November 2018, Mr Pattenden:136F138

94.1.    failed to exercise his powers and discharge his duties in good faith in the best interests of any of ACBF 2 and for a proper purpose, and as a result contravened s 181(1) of the Corporations Act; and

94.2.    used his position contrary to and in contravention of s 182(1) of the Corporations Act.

Contravention – ACBF Plans

95.    By reason of the matters described in paragraph 71 above, and Mr Pattenden’s positions within the ACBF business as set out in paragraph 23 above, Mr Pattenden:137F139

95.1.    caused ACBF Plans to maintain the arrangements with Crown from 4 September 2017 until 30 November 2018 without taking any or all of the necessary steps to consider and pursue the matters in paragraph 72.2 above;

95.2.    failed to take all necessary steps to manage the conflict of interest that arose between his duties to ACBF Plans and his interest in Crown, or Mr Law’s duties to ACBF Plans and Mr Law’s interest in Crown; and

95.3.    used his position as a director or officer of ACBF Plans to:

95.3.1.    obtain an advantage for Crown and ultimately himself and Mr Law; and

95.3.2.    cause a detriment to ACBF Plans.

96.    Mr Pattenden’s conduct described in paragraph 95 above:138F140

96.1.    was not in good faith in the best interests of ACBF Plans;

96.2.    was done for the improper purpose of gaining an advantage for Crown and ultimately himself and Mr Law; and

96.3.    resulted in Mr Pattenden:

96.3.1.    gaining an advantage for Crown and ultimately himself and Mr Law; and

96.3.2.    causing detriment to ACBF Plans.

97.    For each of the acts or omissions described in paragraphs 95 and 96 above, including when ACBF 2 paid the increased premium from 4 September 2017 until 30 November 2018 and thus presented the vulnerability for ACBF Plans described in paragraph 71.1 above, Mr Pattenden:139F141

97.1.    failed to exercise his powers and discharge his duties in good faith in the best interests of ACBF Plans and for a proper purpose, and as a result contravened s 181(1) of the Corporations Act; and

97.2.    used his position contrary to and in contravention of s 182(1) of the Corporations Act.

Contravention – ACBF Community

98.    By reason of the matters described in paragraph 75 above, and Mr Pattenden’s positions within the ACBF business as set out in paragraph 23 above, Mr Pattenden:140F142

98.1.    caused ACBF Community to maintain the arrangements with Crown from 4 September 2017 until 30 November 2018 without taking any or all of the necessary steps to consider and pursue the matters in paragraph 76.2 above;

98.2.    failed to take all necessary steps to manage the conflict of interest that arose between Mr Pattenden’s duties to ACBF Community and Mr Pattenden’s interest in Crown, or Mr Law’s duties to ACBF Community and Mr Law’s interest in Crown; and

98.3.    used his position as a director or officer of ACBF Community to:

98.4.    obtain an advantage for Crown and ultimately himself and Mr Law; and

98.5.    cause a detriment to ACBF Community.

99.    Mr Pattenden’s conduct described in paragraph 98 above:141F143

99.1.    was not in good faith in the best interests of ACBF Community;

99.2.    was done for the improper purpose of gaining an advantage for Crown and ultimately himself and Mr Law; and

99.3.    resulted in Mr Pattenden:

99.3.1.    gaining an advantage for Crown and ultimately himself and Mr Law; and

99.3.2.    causing detriment to ACBF Community.

100.    For each of the acts or omissions described in paragraphs 98 and 99 above, including when ACBF 2 paid the increased premium from 4 September 2017 until 30 November 2018 and thus presented the vulnerability for ACBF Community described in paragraph 75.1 above, Mr Pattenden:142F144

100.1.    failed to exercise his powers and discharge his duties in good faith in the best interests of ACBF Community and for a proper purpose, and as a result contravened s 181(1) of the Corporations Act; and

100.2.    used his position contrary to and in contravention of s 182(1) of the Corporations Act.

C    DECLARATIONS

101.    As the Corporations Act stood at the time of the Relevant Period, s 1317E(1) provided that if a Court is satisfied that a person has contravened a civil penalty provision, it must make a declaration of contravention. At all times during the Relevant Period, ss 180(1), 181(1) and 182(1) were civil penalty provisions.143F145

102.    The declarations sought in the Agreed Proposed Orders ought to be made because the facts and admissions contained in the SAFA establish that the contraventions set out in the Agreed Proposed Orders have occurred.

D    DISQUALIFICATION ORDERS

103.    For the following reasons, the parties jointly submit that it is appropriate for the Court to make an order under s 206C(1)(a)(i) and/or s 206E(1)(a)(ii) of the Corporations Act that Mr Pattenden be disqualified from managing corporations for 15 years.

D1.    RELEVANT PROVISIONS

104.    Section 206C(1) is engaged where the Court declares that Mr Pattenden contravened ss 180(1), 181(1) and/or 182(1) of the Corporations Act.144F146 It provides that, on application by ASIC, the Court may disqualify a person from managing corporations for a period that the Court considers appropriate if (a) a declaration is made under, relevantly, s 1317E (para (a)(i)); and (b) the Court is satisfied that the disqualification is justified.

105.    Section 206E(1)(a)(ii) is engaged where the Court has declared that Mr Pattenden has contravened the Corporations Act more than once, such as by contravening ss 180(1), 181(1) and/or 182(1) in the ways admitted in the SAFA and outlined above.145F147 It provides that, on application by ASIC, the Court may disqualify a person from managing corporations for the period that the Court considers appropriate if the person has, relevantly, at least twice contravened the Corporations Act (para (a)(ii)); and (b) the Court is satisfied that the disqualification is justified.

106.    Sections 206C(2) and s 206E(2) provide that, in determining whether the disqualification is justified, the Court may have regard to (a) the person’s conduct in relation to the management, business or property of any corporation; and (b) any other matters that the Court considers appropriate.

107.    As the criteria relevant to the exercise of the Court’s discretion under ss 206C and 206E is the same, nothing turns on whether disqualification is made under one or the other provision.146F148

D2.    PRINCIPLES

108.    The principles relevant to the Court’s discretion to make orders as to pecuniary penalties and disqualification were recently restated by McEvoy J in ASIC v iSignThis Ltd.147F149

109.    First, the court has an established practice of considering the period of disqualification before considering whether any pecuniary penalty should be awarded, or the amount of that penalty.148F150 In an appropriate case, the court may make a pecuniary penalty order in addition to a disqualification order, having regard to the purposes for which such orders are made.149F151

110.    Second, while the primary purpose of a pecuniary penalty order is to act as a specific and general deterrent against repetition of like conduct, the primary aim of disqualification orders is the protection of the public from the harmful use of the corporate structure, or from use that is contrary to proper commercial standards.150F152 Protection of the public also extends to protection of individuals who deal with companies, including consumers, creditors, shareholders and investors. However, disqualification must not be excessive and no one should be “sacrificed for the public interest”.151F153

111.    Third, it is the different purposes of disqualification orders and pecuniary penalty orders that justify the long-standing practice of considering the imposition of a pecuniary penalty only after a disqualification order is considered.152F154

112.    Fourth, the length of the period of disqualification and the seriousness of the contraventions in question are correlative. In assessing the appropriate length of disqualification, consideration is to be given to the degree of seriousness of the contraventions, the propensity that the defendant may have to engage in similar conduct in the future, and the likely harm that may be caused to the public. Longer periods of disqualification are reserved where contraventions have been of a serious nature such as those involving dishonesty and large financial losses.153F155 Whether a contravention is “serious” is ultimately a question of fact.154F156

113.    Fifth, a number of factors have been identified in the authorities as relevant to an assessment of the length of a period of disqualification, including the following:155F157

113.1.    whether the conduct was inadvertent or deliberate or continued, knowing and wilful or whether the director had acted dishonestly;

113.2.    whether the director has expressed any contrition or remorse;

113.3.    the experience and age of the director;

113.4.    the relevance of the contraventions to the company’s business;

113.5.    the consequences of the contraventions committed by the director.

114.    Sixth, previous cases will only provide general guidance for determining a penalty or length of disqualification.156F158

115.    Seventh, cooperation with ASIC may also be a mitigating factor (but likely to a lesser degree) where cooperation has spared the community the expense of a contested trial and enabled the resources of the regulator to be allocated to other investigations.157F159 But this should only be where it can fairly be said that an admission of liability (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice.158F160

116.    Last, the principles of totality, course of conduct and parity also inform the court’s consideration of disqualification. When determining the disqualification period to be imposed for multiple contraventions, the court should impose a disqualification period for each individual contravention and then take into account the totality principle to adjust that period to arrive at a total effective disqualification.159F161

117.    Further, the principles on agreed relief (set out below in section E2) are not confined to agreement on pecuniary penalty, but apply equally to agreement on other forms of relief such as disqualification.160F162

E    PECUNIARY PENALTIES

118.    If the declarations of contravention sought in the Agreed Proposed Orders are made, the Court may order Mr Pattenden to pay a pecuniary penalty: s 1317G(1). The parties jointly submit that a penalty of $250,000 is appropriate, for the reasons set out below.

E1.    RELEVANT PROVISIONS

119.    A Court may order a person to pay the Commonwealth a pecuniary penalty of up to $200,000 if a declaration of contravention has been made under s 1317E, the contravention is of a corporate/scheme civil penalty provision and the contravention materially prejudices the interests of the corporation, materially prejudices the ability of the corporation to pay its creditors or is serious: s 1317G(1).

120.    Accordingly, during the Relevant Period, the maximum penalty for a contravention of ss 180(1), 181(1) and 182(1) was $200,000.

121.    The parties submit that, if the Court makes the declarations sought, the Court’s discretion is enlivened in this case given the admissions made by Mr Pattenden.161F163

122.    The Court may act upon the admission of fact that the conduct in this case is serious.162F164 In any event, conduct will be considered “serious” for the purposes of s 1317G(1)(b) if the default or neglect is “grave”, “not trifling”, “weighty”, “important” or “significant” by reference to the potential or actual consequences of the contravention.163F165 The potential or actual risks that Mr Pattenden’s contravening conduct presented to the ACBF Entities and their respective members were significant and should be considered serious by the Court.

E2.    AGREED PENALTY

123.    The proper approach to civil regulatory orders that are sought on an agreed basis has recently been restated by this Court in Australian Securities and Investments Commission v FIIG Securities Limited164F166 (ASIC v FIIG) and Clean Energy Regulator v E Connect Solar & Electrical Pty Ltd165F167 and the parties adopt those principles.

124.     In summary:

124.1.    the High Court in Commonwealth v Director, Fair Work Building Industry Inspectorate166F168 reaffirmed the practice of acting upon agreed penalty submissions stating:167F169

Subject to the court being sufficiently persuaded of the accuracy of the parties’ agreement as to facts and consequences, and that the penalty which the parties propose is an appropriate remedy in the circumstances thus revealed, it is consistent with principle and … highly desirable in practice for the court to accept the parties’ proposal and therefore impose the proposed penalty.

124.2.    Where the court is sufficiently persuaded of the accuracy of the parties’ agreement as to facts and consequences and to the appropriateness of the penalty, it is highly desirable for the court to accept the parties’ proposal and to impose the proposed penalty.168F170 There is an important public policy interest in giving effect to agreements as to penalty, particularly where such agreements encourage corporations to acknowledge contraventions and thereby avoid lengthy and complex litigation and promote predictability of outcomes in civil penalty proceedings.169F171

124.3.    Further, the Court may assume that ASIC, as a specialist regulatory body, will fashion penalty submissions with an overall view to achieving compliance and will be in a position to offer informed submissions as to the effect of contraventions on the industry and the level of penalty necessary to achieve compliance.170F172 Accordingly, while submissions of a regulator will be considered on their merits in the ordinary way, ASIC’s views as to the appropriate penalty to achieve the necessary deterrent effect should be highly persuasive in the Court’s consideration of the appropriate penalty.171F173

124.4.    Accordingly, where the penalty proposed by the parties is within the permissible range, the court will not depart from the submitted figure merely because it might otherwise have been disposed to select some other figure.172F174

125.    These principles are not confined to agreed submissions on pecuniary penalties but apply equally to agreement on other forms of relief. The High Court's conclusions as to the desirability of acting upon agreed penalty submissions were made in the context of its broader recognition that civil penalties are but one of numerous forms of relief which regulators could choose and pursue as a civil litigant in civil proceedings, including by making submissions as to that relief.173F175 This is consistent with the long-standing judicial support for agreed positions on declarations, injunctions and the like in civil regulatory proceedings, having regard to the public interest.174F176

126.    In considering whether an agreed and jointly proposed penalty is appropriate, it is necessary to bear in mind that there is no single appropriate penalty.175F177 The Full Court in Volkswagen explained that there is a permissible range of penalties within which no particular figure can necessarily be said to be more appropriate than another.176F178 The permissible range is determined by all the relevant facts and consequences of the contravention and the contravener’s circumstances. An agreed and jointly proposed penalty may be considered to be “an” appropriate penalty if it falls within that permissible range.177F179 Further, the Full Court said that the court should generally recognise that the agreed penalty is most likely the result of compromise and pragmatism on the part of the regulator, and reflects, among other things, the regulator’s considered estimation of penalty necessary to achieve deterrence and the risks and expense of the litigation had it not been settled.178F180

127.    Accordingly, where the penalty jointly proposed by the regulator and the defendant is within the permissible range, the Court will not depart from the submitted figure “merely because it might otherwise have been disposed to select some other figure”.179F181

E3.    PRINCIPLES ON PENALTY ASSESSMENT

128.    Under s 1317G, the Parliament has left it to the Court to decide what penalty is appropriate in all the circumstances having regard to the Court’s own independent opinion.180F182

129.    The fundamental principles may be summarised as follows.

130.    First, the Court’s discretion to impose a penalty must be exercised judicially; that is, fairly and reasonably having regard to the subject matter, scope and purpose of the legislation.181F183

131.    Second, the primary or sole purpose of civil penalties is the promotion of the public interest in compliance with the provisions of the relevant legislation by the deterrence of further contraventions.182F184

132.    Third, the penalty must be “proportionate” and “appropriate” in the sense that it strikes a reasonable balance between oppressive severity and deterrence in the circumstances of the case.183F185 The Court’s task is to identify and balance all of the relevant factors and make a value judgment as to the appropriate penalty, a process described as an intuitive or “instinctive synthesis”.184F186 Having taken into account all relevant circumstances and discussed their significance, the court makes a value judgment as to what is the appropriate amount of penalty in light of the protective and deterrent purpose of a pecuniary penalty.185F187

133.    Fourth, the Court should have regard to the prescribed maximum penalty and there should be some reasonable relationship between the maximum penalty and that imposed. The maximum provides a “yardstick” to be balanced with all other relevant factors, and the Court should not simply start with the maximum penalty and proceed by making proportional deductions to that amount.186F188

134.    Fifth, in determining the pecuniary penalty, the Court must take into account all relevant matters.187F189 Facts prior to the period being penalised may be taken into account in determining the penalty in the intuitive or instinctive syntheses performed by the Court.188F190

135.    Sixth, additional factors may be taken into account as relevant considerations, insofar as they inform the penalty necessary to secure the objects of deterrence. However, not all factors that have been identified in previous cases will necessarily be relevant or important in every case, and they are not to be applied as a “rigid catalogue”.189F191

136.    Last, criminal law principles of totality, course of conduct and parity also inform the court’s determination of penalty.190F192 The course of conduct principle will apply where there is a sufficient interrelationship in the legal and factual elements of the acts or omissions constituting the contravening conduct.191F193 In these circumstances, the court may, in its discretion, penalise the acts or omissions as a single course of conduct.192F194 The court may also apply the totality principle to consider the entirety of the underlying contravening conduct to determine whether the “total” or aggregate penalty is just and appropriate.193F195 Parity of penalty will be an important consideration where there are several defendants involved in the same events,194F196 such as in this case. In this respect, where other things are equal, persons concerned in the same contravention should receive the same punishment; and where other things are not equal, a due discrimination should be made.195F197 Where there is a difference in the disqualification period or penalty between different defendants, there must be a persuasive rationale, such as the part in which the defendant played in the contravention.196F198

F    APPLICATION

137.    For the following reasons, the jointly proposed disqualification period and pecuniary penalty are appropriate having regard to the circumstances of the conduct and the relevant principles in relation to disqualification and pecuniary penalties set out above. In particular, the proposed period of disqualification is appropriate to achieve the protective objects of such an order and the quantum of the proposed pecuniary penalty is appropriate to achieve the principal object of deterrence. Given the overlap, below we consider the factors relevant to assessing pecuniary penalties and disqualification together.

138.    Circumstances of the contravention: Mr Pattenden was responsible for establishing Crown and the insurance arrangements with the ACBF Entities,197F199 which gave him a financial benefit, during the time in which he was also responsible for overseeing the operation of and any significant decision relating to the ACBF Entities.198F200 He was the most senior officer within the ACBF business199F201 and was told by Mr Wilson that doubling the premium for ACBF 2, going on the figures for 2016, would result in a loss of “around $360K” and could pose problems of insolvent trading.200F202 Mr Pattenden knew or ought to have known that each of the ACBF Entities was vulnerable to price increases by Crown.201F203

139.    Mr Pattenden admits that, during the Relevant Period, he did not consider properly or at all the effect of the Crown arrangements on the financial position of ACBF Entities and whether continuing the policy with Crown was in the best interests of ACBF Entities and its fund members.202F204

140.    While the contraventions occurred during the Relevant Period, of around 14 months, the facts relevant to the whole of the circumstances began in 2002 for ACBF 2, and 2005 for ACBF Plans and ACBF Community, when Mr Pattenden created Crown and began the insurance arrangements between it and the ACBF Entities.203F205

141.    The insurance arrangements with Crown had been ongoing for at least 15 years before the decision was made to double the premiums for ACBF 2. These facts may be taken into account in determining the penalty.204F206

142.    The arrangement with Crown led ACBF 2 to the position that it found itself in on 4 September 2017, whereby ACBF 2 was not accumulating or attempting to accumulate amounts to pay members’ claims and it was instead relying on Crown for this purpose and had no alternative source of funds to pay member claims.205F207 This left it vulnerable to price increases by Crown. The position was the same for ACBF Plans and ACBF Community.206F208

143.    Mr Pattenden had the options set out in paragraphs 68.4, 72.2 and 76.2 above available to him to consider, but did not do so.

144.    Age and experience of director: Mr Pattenden is 78 years old. At the time of the contraventions, Mr Pattenden was an experienced director. Mr Pattenden had been a director of the ACBF Entities at various times beginning from 1992 for ACBF 2, 1997 for ACBF Plans and 1996 for ACBF Community.207F209 He had also been acting in the role of chief executive officer or managing director of the ACBF business and the ACBF Entities since at least 2002 until October 2017 and was responsible for overseeing the operation of and any significant decision relating to the ACBF Entities from at least April 2002 until 30 November 2018.208F210 This should be taken into account when considering the seriousness of the contraventions.

145.    Deliberateness: Mr Pattenden was responsible for causing or allowing the conflict between his duties to the ACBF Entities and his interest in Crown. In that sense, the conduct was deliberate and not inadvertent. Mr Pattenden was responsible for setting up the arrangements that gave rise to the conflict and which resulted in him obtaining an advantage. He knew by 4 September 2017 that if the premiums paid by ACBF 2 to Crown were to double from the amount paid by ACBF 2 before the Relevant Period, then there was a risk for ACBF 2 that it would become insolvent.209F211 With that knowledge, he deliberately (in the sense that it was not inadvertent) continued the arrangements with Crown throughout the Relevant Period until he ceased as a director of the ACBF Entities on 30 November 2018 and failed to pursue, properly or at all, any of the alternative options.210F212 It is not alleged that Mr Pattenden’s conduct was dishonest.

146.    Nature and extent of any loss or damage suffered: the premium increase had a material negative effect on the financial position of ACBF 2.211F213 The impact of the premium increase, and Mr Pattenden’s conduct in causing it or allowing it to occur in the circumstances where the conflict existed and ACBF 2 had no other source of funds to pay member claims without insurance from Crown,212F214 was that it created a substantial risk that ACBF 2 would become insolvent within approximately four or less years and would need to be wound up.213F215

147.    If ACBF 2 had been wound up in insolvency, ACBF 2’s policy with Crown would have terminated and eligible members of Fund 2 would not have been able to recover all or part of any cancellation benefit they were owed.214F216 In those circumstances, if fund members’ cover was cancelled, they would have been without funeral cover.215F217

148.    Further, the premium increase for ACBF 2 demonstrated ACBF Plans’ and ACBF Community’s vulnerability to premium increases from Crown. If Crown had increased premiums for ACBF Plans or ACBF Community during the Relevant Period, whether by doubling those premiums as it had done for ACBF 2 or by increasing the premiums at all, the effect of the premium increase would have been, in each case, that ACBF Plans and ACBF Community would have immediately become insolvent.216F218

149.    If ACBF Plans and ACBF Community were wound up in insolvency, their respective fund members’ cover would have been cancelled and they would have been without funeral cover.217F219

150.    Extent of profit from the contraventions: Mr Pattenden profited from the contraventions. The ACBF Entities were the only entities insured with Crown.218F220 Mr Pattenden was the founder, and at all material times, a director, and indirectly the majority shareholder of Crown.219F221 The tables set out at paragraphs 45, 47 and 49 of the SAFA show the amounts that were paid to Crown by way of premiums by each of the ACBF Entities from the inception of the insurance policies to November 2018.

151.    Over the period 2002 to November 2018, Crown was paid net premiums, less claims and profit share of (according to paragraphs 45, 47 and 49 of the SAFA):

151.1.    for Fund 2, $6,022,292;

151.2.    for Fund 3, $10,538,861;

151.3.    for Fund 4, $279,415.

152.    In the Relevant Period, Mr Pattenden benefitted financially from the ACBF Entities continuing to pay premiums to Crown.220F222 Based on the tables at paragraphs 45, 47 and 49 of the SAFA, during FY2018 and FY2019 to November 2018 (the Relevant Period being from 4 September 2017 to 30 November 2018), Crown’s net premiums received less claims and profit share was:

152.1.    for Fund 2, $411,319 (the table at paragraph 79 of the SAFA identifies more precisely the amounts paid to Crown by ACBF 2 in the Relevant Period as $365,693.39);221F223

152.2.    for Fund 3, $914,173;

152.3.    for Fund 4, -$3,797.

153.    General deterrence: a period of disqualification is necessary in this case not only for specific deterrence but also as a general deterrent.222F224 By ordering a period of disqualification, the public will be protected from (and send a signal to others about) Mr Pattenden’s conduct in using the corporate structure in a way that is harmful or contrary to proper commercial standards.223F225 Notwithstanding that Mr Pattenden is no longer a director of the ACBF Entities and the entities are in liquidation there is still a need for specific deterrence and protection of the public to ensure that he does not act in a similar way.224F226 Further, the disqualification period is appropriate to further the requirements of general deterrence.225F227

154.    Seriousness of the conduct: a disqualification period of 15 years correlates to the seriousness of the conduct. The parties agree that the conduct was serious in that it was deliberate (see further the discussion on deliberateness in the penalty section above) and continued throughout the Relevant Period until Mr Pattenden ceased as a director of the ACBF Entities, where Mr Pattenden used his position as a director to obtain an advantage for Crown, and ultimately himself (and Mr Law).226F228

155.    Relevance of contraventions to the entity’s business: The contraventions were central to the business of the ACBF Entities as, given the way in which Crown and the ACBF Entities had been established by Mr Pattenden, the ACBF Entities were in a position where they could not pay members’ claims without insurance from Crown.227F229

156.    Cooperation and other mitigating factors: First, Mr Pattenden engaged constructively with ASIC and admitted to all contraventions alleged against him.228F230 Secondly, through the SAFA, Mr Pattenden acknowledges and accepts responsibility for his conduct and has thereby indicated his willingness to facilitate the course of justice. The result is that the cost to the public of a fully contested liability hearing of 3 weeks has been avoided.229F231 Thirdly, Mr Pattenden’s admissions and co-operation also demonstrate contrition, and insight into his conduct. Fourthly, Mr Pattenden is 78 years old and he has not been found to have previously engaged in similar conduct.230F232

157.    Parity: Mr Pattenden’s involvement as founder of the ACBF business and Crown and his position as the ultimate decision maker for the ACBF business (as set out in paragraph 51 of the SAFA) justifies imposing a higher penalty and period of disqualification on him than the other defendants in this proceeding.

158.    Course of conduct: there should be three courses of conduct, one for each ACBF Entity, as the factual substratum is “unitary” for each entity and can be traced back to a single homogenous cause.231F233 The parties agree that there were three contraventions of each of ss 180(1), 181(1) and 182(1), one for each ACBF Entity, with 9 contraventions in total.232F234

159.    Totality: the principle of totality should be applied, which requires the Court to look at the entirety of the offending and determine the most appropriate sentence for all the contraventions taken together.233F235

G    COSTS AND OTHER ORDERS

160.    The Court’s powers to award costs are found in:

160.1.    s 43 of the Federal Court Act 1976 (Cth), which provides that the award of costs is in the discretion of the Court (s 43(2)); and

160.2.    r 40.02 of the Federal Court Rules 2011 (Cth), which allows costs to be awarded in a lump sum instead of, or in addition to, any taxed costs.

161.    Mr Pattenden consents to an order that he pay $50,000 towards ASIC’s costs of and incidental to the proceedings.

Date: [insert]

Jody Marshall

AGS lawyer

for and on behalf of the Australian Government Solicitor

Lawyer for the Plaintiff

Jake Sunney

Small Myers Hughes

Lawyer for the Defendant

1.     SAFA at [10].

2.     SAFA at [8].

3.     SAFA at [11].

4.     SAFA at Section 2.3, [12]-[38].

5.     SAFA at [13].

6.     SAFA at [13].

7.     SAFA at [17.4].

8.     SAFA at [17.5].

9.     SAFA at [17.8].

10.     SAFA at [22].

11.     SAFA at [18].

12.     SAFA at [19].

13.     SAFA at [27].

14.     SAFA at [28].

15.     SAFA at [14], [15].

16.     SAFA at [14].

17.     SAFA at [15].

18.     SAFA at [29.6].

19.     SAFA at [29.7].

20.     SAFA at [30].

21.     SAFA at [39].

22.     SAFA at [38].

23.     SAFA at Section 2.4, [39]-[50].

24.     SAFA at [39].

25.     SAFA at [40].

26.     SAFA at [41].

27.     SAFA at [42].

28.     SAFA at [44].

29.     SAFA at [45], [47], [49].

30.     SAFA at [45].

31.     SAFA at [43].

32.     SAFA at [46].

33.     SAFA at [48].

34.     SAFA at [50].

35.     SAFA at [51.1]-[51.3].

36.     SAFA at [51.4].

37.     SAFA at [51.4].

38.     SAFA at [51.5].

39.     SAFA at [51.6].

40.     SAFA at [52].

41.     SAFA at [53.1], [54], [58.1]-[58.3], [59.1]-[59.3].

42.     SAFA at [53.1]-[53.2].

43.     SAFA at [53.4].

44.     SAFA at [53.5].

45.     SAFA at [60].

46.     SAFA at [69]-[70].

47.     SAFA at [61].

48.     SAFA at [62].

49.     SAFA at [63].

50.     SAFA at [64].

51.     SAFA at [67].

52.     SAFA at [68].

53.     SAFA at [68].

54.     SAFA at [69].

55.     SAFA at [70].

56.     SAFA at [71].

57.     SAFA at [72].

58.     SAFA at [73].

59.     SAFA at [74].

60.     SAFA at [75].

61.     SAFA at [76].

62.     SAFA at [77].

63.     SAFA at [78].

64.     SAFA at [80].

65.     SAFA at [81.5].

66.     SAFA at [81.3].

67.     SAFA at [81.2].

68.     SAFA at [81.4].

69.     SAFA at [81.6.1].

70.     SAFA at [81.6.2].

71.     SAFA at [81.6.2].

72.     SAFA at [81.6.2].

73.     SAFA at [83].

74.     SAFA at [81.7].

75.     SAFA at [82].

76.     SAFA at [84].

77.     SAFA at [85.3].

78.     SAFA at [85.2]

79.     SAFA at [85.1].

80.     SAFA at [85.4].

81.     SAFA at [85.4].

82.     SAFA at [85.5].

83.     SAFA at [85.6].

84.     SAFA at [85.7].

85.     SAFA at [85.8].

86.     Shafron v ASIC (2012) 247 CLR 465; [2012] HCA 18 at [18]; ASIC v Mitchell (No 2) (2020) 382 ALR 425; [2020] FCA 1098 at [1397].

87.     ASIC v Green County Pty Ltd [2025] FCA 367 at [374].

88.     ASIC v Mitchell (No 2) (2020) 382 ALR 425; [2020] FCA 1098 at [1397]; ASIC v Noumi Ltd (No 4) [2024] FCA 1192 at [21]; ASIC v Maxwell (2006) 59 ACSR 373; [2006] NSWSC 1052 at [100].

89.     ASIC v Mitchell (No 2) (2020) 382 ALR 425; [2020] FCA 1098 at [1397].

90.     ASIC v Green County Pty Ltd [2025] FCA 367 at [375].

91.     ASIC v Rich (2009) 236 FLR 1; [2009] NSWSC 1229 at [7202].

92.     ASIC v Noumi Ltd (No 4) [2024] FCA 1192 at [24].

93.     ASIC v Noumi Ltd (No 4) [2024] FCA 1192 at [24].

94.     ASIC v Mitchell (No 2) (2020) 382 ALR 425; [2020] FCA 1098 at [1430].

95.     ASIC v Green County Pty Ltd [2025] FCA 367 at [379].

96.     ASIC v Mitchell (No 2) (2020) 382 ALR 425; [2020] FCA 1098 at [1430].

97.     ASIC v Mariner Corporation Ltd (2015) 241 FCR 502; [2015] FCA 589 at [451].

98.     ASIC v Rich (2009) 236 FLR 1; [2009] NSWSC 1229 at [7242].

99.     ASIC v Adler (2002) 168 FLR 253; [2002] NSWSC 171 at [372(14)].

100.     SAFA at [51].1]-[51.3].

101.     SAFA at [51.4].

102.     SAFA at [60].

103.     SAFA at [86].

104.     SAFA at [87].

105.     SAFA at [88].

106.     SAFA at [89].

107.     SAFA at [94].

108.     SAFA at [95].

109.     SAFA at [96].

110.     SAFA at [97].

111.     SAFA at [102].

112.     SAFA at [103].

113.     SAFA at [104].

114.     SAFA at [105].

115.     ASIC v Bettles (2023) 169 ACSR 244; [2023] FCA 975 at [441(1)].

116.     ASIC v Bettles (2023) 169 ACSR 244; [2023] FCA 975 at [441(2)]; Special Gold Pty Ltd (in liq) v Dyldam Developments Pty Ltd (subject to a Deed of Company Arrangement) (No 2) [2025] FCA 825 at [76].

117.     Sunnya Pty Ltd v He (2025) 175 ACSR 259; [2025] NSWCA 79 at [29] – [34].

118.     ASIC v Bettles (2023) 169 ACSR 244; [2023] FCA 975 at [441(3)].

119.     United Petroleum Australia Pty Ltd v Herbert Smith Freehills (2018) 128 ACSR 324; [2018] VSC 347 at [640].

120.     ASIC v Bettles (2023) 169 ACSR 244; [2023] FCA 975 at [441(4)].

121.     ASIC v Bettles (2023) 169 ACSR 244; [2023] FCA 975 at [442(1)].

122.     ASIC v Mitchell (No 2) (2020) 382 ALR 425; [2020] FCA 1098 at [1516].

123.     ASIC v Mitchell (No 2) (2020) 382 ALR 425; [2020] FCA 1098 at [1518].

124.     ASIC v Bettles (2023) 169 ACSR 244; [2023] FCA 975 at [442(2)]; ASIC v Mitchell (No 2) (2020) 382 ALR 425; [2020] FCA 1098 at [1517].

125.     ASIC v Mitchell (No 2) (2020) 382 ALR 425; [2020] FCA 1098 at [1517].

126.     ASIC v iSignthis Ltd [2024] FCA 669 at [591].

127.     ASIC v iSignthis Ltd [2024] FCA 669 at [591].

128.     ASIC v iSignthis Ltd [2024] FCA 669 at [591].

129.     ASIC v Mitchell (No 2) (2020) 382 ALR 425; [2020] FCA 1098 at [1525].

130.     ASIC v Mitchell (No 2) (2020) 382 ALR 425; [2020] FCA 1098 at [1525]-[1526].

131.     ASIC v Mitchell (No 2) (2020) 382 ALR 425; [2020] FCA 1098 at [1527].

132.     ASIC v Mitchell (No 2) (2020) 382 ALR 425; [2020] FCA 1098 at [1535].

133.     ASIC v iSignthis Ltd [2024] FCA 669 at [592].

134.     ASIC v iSignthis Ltd [2024] FCA 669 at [598].

135.     SAFA at [90].

136.     SAFA at [91].

137.     SAFA at [92].

138.     SAFA at [98].

139.     SAFA at [99].

140.     SAFA at [100].

141.     SAFA at [106].

142.     SAFA at [107].

143.     SAFA at [108].

144.     Item 1 in the table at s 1317E(1) of the Corporations Act.

145.     ASIC v iSignthis Ltd [2025] FCA 917 at [12].

146.     ASIC v iSignthis Ltd [2025] FCA 917 at [12].

147.     ASIC v iSignthis Ltd [2025] FCA 917 at [13].

148.     ASIC v iSignthis Ltd [2025] FCA 917 at [14]-[26].

149.     ASIC v iSignthis Ltd [2025] FCA 917 at [15].

150.     See also ASIC v GetSwift Ltd (2023) 167 ACSR 178; [2023] FCA 100 at [64]-[65].

151.     ASIC v iSignthis Ltd [2025] FCA 917 at [16].

152.     ASIC v iSignthis Ltd [2025] FCA 917 at [16].

153.     ASIC v iSignthis Ltd [2025] FCA 917 at [17].

154.     ASIC v iSignthis Ltd [2025] FCA 917 at [18].

155.     ASIC v GetSwift Ltd (2023) 167 ACSR 178; [2023] FCA 100 at [54].

156.     ASIC v iSignthis Ltd [2025] FCA 917 at [19].

157.     ASIC v iSignthis Ltd [2025] FCA 917 at [20].

158.     ASIC v iSignthis Ltd [2025] FCA 917 at [23].

159.     ASIC v iSignthis Ltd [2025] FCA 917 at [24] citing Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; [2008] FCAFC 70 at [76].

160.     ASIC v iSignthis Ltd [2025] FCA 917 at [26].

161.     ASIC v Hawkins [2025] FCA 121, Annexure A at [140], adopted as the reasoning of the Court at [3].

162.     SAFA at [93], [101], [109].

163.     ASIC v Hawkins [2025] FCA 121, Annexure A at [163], adopted as the reasoning of the Court at [3]. ASIC v Newcrest Mining Ltd (2014) 101 ACSR 46; [2014] FCA 698 at [57].

164.     ASIC v Hawkins [2025] FCA 121, Annexure A at [164], adopted as the reasoning of the Court at [3]; ASIC v Hochtief Aktiengesellschaft (2016) 117 ACSR 589; [2016] FCA 1489 at [97].

165.     [2026] FCA 92 at [55]-[58].

166.     (2023) 171 ACSR 216; [2023] FCA 1082 at [33]-[40].

167.     Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; [2015] HCA 46 (FWBII).

168.     FWBII (2015) 258 CLR 482; [2015] HCA 46 at [58].

169.     FWBII (2015) 258 CLR 482; [2015] HCA 46 at [58]; ASIC v ANZ (No 3) [2020] FCA 1421 at [78]; ASIC v MLC Nominees (2020) 147 ACSR 266; [2020] FCA 1306 at [114]; ACCC v Coles [2014] FCA 1405 at [72]; ASIC v MobiSuper [2021] FCA 855 at [28].

170.     ASIC v Allianz Australia Insurance Ltd (2021) 156 ACSR 638; [2021] FCA 1062 at [128] (ASIC v Allianz); FWBII (2015) 258 CLR 482; [2015] HCA 46 at [28], [46]; NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 290 (NW Frozen Foods v ACCC); Volkswagen v ACCC (2021) 284 FCR 24; [2021] FCAFC 49 at [126]; ASIC v ANZ (No 3) [2020] FCA 1421 at [78]; ASIC v MLC Nominees (2020) 147 ACSR 266; [2020] FCA 1306 at [114].

171.     FWBII (2015) 258 CLR 482; [2015] HCA 46 at [60].

172.     See ASIC v Allianz (2021) 156 ACSR 638; [2021] FCA 1062 at [127]; FWBII (2015) 258 CLR 482; [2015] HCA 46 at [61].

173.     ASIC v Hawkins [2025] FCA 121, Annexure A at [142] citing FWBII (2015) 258 CLR 482; [2015] HCA 46 at [47], adopted as the reasoning of the Court at [3]; ASIC v ANZ (No 3) [2020] FCA 1421 at [78].

174.     See FWBII (2015) 258 CLR 482; [2015] HCA 46 at [24], [57]-[59], [63], [103], [107].

175.     See NW Frozen Foods v ACCC (1996) 71 FCR 285 at 290; ACCC v Coles [2014] FCA 1405 at [74]-[76]; ASIC v MobiSuper [2021] FCA 855 at [37].

176.     Volkswagen Aktiengellschaft v ACCC (2021) 284 FCR 24; [2021] FCAFC 49 at [127].

177.     Volkswagen Aktiengellschaft v ACCC (2021) 284 FCR 24; [2021] FCAFC 49 at [127].

178.     Volkswagen Aktiengellschaft v ACCC (2021) 284 FCR 24; [2021] FCAFC 49 at [127].

179.     Volkswagen Aktiengellschaft v ACCC (2021) 284 FCR 24; [2021] FCAFC 49 at [129].

180.     FWBII (2015) 258 CLR 482; [2015] HCA 46 at [47]

181.     ASIC v MLC Nominees (2020) 147 ACSR 266; [2020] FCA 1306 at [117].

182.     Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; [2022] HCA 13 at [40]; ASIC v iSignthis Ltd [2025] FCA 917 at [30].

183.     Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; [2022] HCA 13 at [9]-[10], [15]; ASIC v iSignthis Ltd [2025] FCA 917 at [31]; ASIC v Commonwealth Bank of Australia [2021] FCA 423 at [4]; ASIC v Westpac [2019] FCA 2147 at [255].

184.     Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; [2022] HCA 13 at [40]-[41], [46]; ASIC v iSignthis Ltd [2025] FCA 917 at [32].

185.     ACCC v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25; [2016] FCAFC 181 at [44].

186.     Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; [2022] HCA 13 at [46]-[48]; ASIC v Mercer Financial Advice (Australia) Pty Ltd [2023] FCA 1453 at [69]-[72]; ASIC v GetSwift Ltd (2023) 167 ACSR 178; [2023] FCA 100 at [64]-[65].; ASIC v MLC Nominees (2020) 147 ACSR 266; [2020] FCA 1306 at [117]; ASIC v iSignthis Ltd [2025] FCA 917 at [35]-[36].

187.     Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; [2022] HCA 13 at [10], [52]-[55]; ASIC v Mercer Financial Advice (Australia) Pty Ltd [2023] FCA 1453 at [68]; ASIC v iSignthis Ltd [2025] FCA 917 at [33].

188.     ASIC v Westpac Banking Corporation (No 3) (2018) 131 ACSR 585; [2018] FCA 1701 at [49].

189.     ASIC v MLC Ltd (2023) 168 ACSR 122; [2023] FCA 539 at [96] citing ASIC v Commonwealth Bank of Australia [2020] FCA 790 at [9].

190.     Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; [2022] HCA 13 at [19]; Australian Building and Construction Commissioner v CFMEU (2017) 254 FCR 68; [2017] FCAFC 113 at [101]; ASIC v Hawkins [2025] FCA 121, Annexure A at [176], adopted as the reasoning of the Court at [3].

191.     ASIC v iSignthis Ltd [2025] FCA 917 at [39]; Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; [2022] HCA 13 at [45]; ASIC v Mercer Financial Advice (Australia) Pty Ltd [2023] FCA 1453 at [69]-[70], [80].

192.     ASIC v MLC Nominees (2020) 147 ACSR 266; [2020] FCA 1306 at [128].

193.     ASIC v MLC Nominees (2020) 147 ACSR 266; [2020] FCA 1306 at [128].

194.     ASIC v MLC Nominees (2020) 147 ACSR 266; [2020] FCA 1306 at [131]; Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; [2008] FCAFC 70 at [5]-[7]; Mill v The Queen (1988) 166 CLR 59 at 62-63.

195.     ASIC v Australian Property Custodian Holdings Ltd (2014) 322 ALR 45; [2014] FCA 1308 at [107]-[109]; ASIC v Commonwealth Bank of Australia [2020] FCA 790 at [77].

196.     ASIC v Australian Property Custodian Holdings Ltd (2014) 322 ALR 45; [2014] FCA 1308 at [109];

197.     ASIC v MacDonald (No 12) (2009) 259 ALR 116; [2009] NSWSC 714 at [320], [322]; Gillfillan v ASIC [2012] NSWCA 370 at [206].

198.     SAFA at [34].

199.     SAFA at [51.5] and [51.6].`

200.     SAFA at [51.4].

201.     SAFA at [64].

202.     SAFA at [42], [84], [85], [94].

203.     SAFA at [88.1]. [88.2], [96.1], [96.2], [104.1], [104.2].

204.     SAFA at [39] - [41].

205.     ASIC v MLC Ltd (2023) 168 ACSR 122; [2023] FCA 539 at [96] citing ASIC v Commonwealth Bank of Australia [2020] FCA 790 at [9].

206.     SAFA at [81.3] - [81.4].

207.     SAFA at [85.2] - [85.3].

208.     SAFA at [51.1]-[51.3].

209.     SAFA at [51.4].

210.     SAFA at [86.2].

211.     SAFA [88.4], [96.4], [104.4].

212.     SAFA at [81.6], [81.7], [110].

213.     SAFA at [81.3] - [81.4].

214.     SAFA at [83.1].

215.     SAFA at [83.2].

216.     SAFA at [83.3].

217.     SAFA at [85.4].

218.     SAFA at [85.7].

219.     SAFA at [41].

220.     SAFA at [51.5].

221.     SAFA [86.10], [94.4], [102.4].

222.     SAFA at [79] contains a table of payments made to Crown during the Relevant Period. The tables at [45] and [79] of the SAFA result in different amounts because the figures drawing on the table at SAFA [45] in paragraph 150 do not include the whole Relevant Period. The table at SAFA [79] relies on the monthly reports provided to Crown, whereas the table SAFA [45] relies on financial reports for FY2018 and monthly reports for FY2019 (until November 2018).

223.     ASIC v Citrofresh International Ltd (No 3) (2010) 268 ALR 303; [2010] FCA 292 at [41].

224.     ASIC v Adler (2002) 42 ACSR 80; [2002] NSWSC 483 at [56(i)]; Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd (No 2) [2016] FCA 528 at [26(a)]; Australian Competition and Consumer Commission v Excite Mobile Pty Ltd (No 2) [2013] FCA 1267 at [170].

225.     ASIC v GetSwift Ltd (2023) 167 ACSR 178; [2023] FCA 100 at [93], [103].

226.     ASIC v GetSwift Ltd (2023) 167 ACSR 178; [2023] FCA 100 at [102].

227.     SAFA at [88.5], [88.6], [90.4.1], [91.2], [91.3.1], [96.5], [98.3], [99.2], [99.3.1], [102.4.2], [104.5], [106.3.1], [107.3.1].

228.     SAFA at [10], [40.1], [81.2] - [81.4], [85.2] - [85.3].

229.     SAFA at [114].

230.     SAFA at [115].

231.     SAFA [113].

232.     Australian Competition and Consumer Commission v Murray Goulburn Co-Operative Co Ltd [2018] FCA 1964 at [29]; ASIC v MLC Nominees (2020) 147 ACSR 266; [2020] FCA 1306 at [176]; ASIC v iSignthis Ltd [2025] FCA 917 at [241];

233.     See, eg, ASIC v Sino Australia Oil and Gas Ltd (in liq) (2016) 118 ACSR 43; [2016] FCA 1488 at [21].

234.     ASIC v GetSwift Ltd (2023) 167 ACSR 178; [2023] FCA 100 at [46].