In the matter of Macquarie Investment Management Limited [2016] NSWSC 1184

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Macquarie Investment Management Limited [2016] NSWSC 1184 Hearing dates: 23 August 2016 Decision date: 23 August 2016 Jurisdiction: Equity Before: Barrett AJA Decision: THE COURT DECLARES THAT: 1. Macquarie Investment Management Limited (MIML) as the responsible entity of the registered managed investment scheme known as the van Eyk Blueprint International Shares Fund (ASRN 103 447 481) (VBI Fund): (a) in exercising its powers and carrying out its duties with respect to the decision made on or about 6 July 2012 to invest in Artefact Partners Global Opportunity Fund Limited shares (APGOF Shares) and approval or acceptance of Artefact Cayman or Artefact Partners as underlying manager, failed to exercise the degree of care and diligence that a reasonable person would exercise if they were in MIML's position, in contravention of s 601FC(1)(b) and s 601FC(5) of the Corporations Act; (b) in exercising its powers and carrying out its duties with respect to the decision made on or about 17 July 2012 to invest in APGOF Shares and the approval or acceptance of Artefact Cayman or Artefact Partners as underlying manager, failed to exercise the degree of care and diligence that a reasonable person would exercise if they were in MIML's position, in contravention of s 601FC(1)(b) and s 601FC(5) of the Corporations Act; and (c) in exercising its powers and carrying out its duties with respect to the decision made on or about 30 October 2012 to invest in APGOF Shares and the approval or acceptance of Artefact Cayman or Artefact Partners as underlying manager, failed to exercise the degree of care and diligence that a reasonable person would exercise if they were in MIML's position, in contravention of s 601FC(1)(b) and s 601FC(5) of the Corporations Act. 2. During the period 15 June 2013 to 9 September 2013, MIML as responsible entity of the VBI Fund permitted members to redeem or withdraw units from the VBI Fund as if the VBI Fund was liquid when the VBI Fund was not liquid, in contravention of s 601FC(1)(b), s 601FC(1)(k) and s 601FC(5) of the Corporations Act. 3. MIML as responsible entity of the VBI Fund, in exercising its powers and carrying out its duties with respect to the investment in APGOF Shares, during the period from 18 February 2013 to no later than 21 July 2014 in not making adequate and timely enquiries of van Eyk in relation to van Eyk's monitoring of the VBI Fund's investment in APGOF Shares (including during the period 1 January 2014 to no later than 21 July 2014, in not making adequate and timely enquiries as to why the Full Redemption had not been paid and when it was likely to be paid), failed to exercise the degree of care and diligence that a reasonable person would exercise if they were in MIML's position, in contravention of s 601FC(1)(b) and s 601FC(5) of the Corporations Act. AND THE COURT ORDERS THAT: 4. Pursuant to section 1317G of the Corporations Act, the Defendant pay to the Commonwealth a pecuniary penalty of $400,000 within 28 days of the date of these orders. 5. The Defendant pay the Plaintiff's costs of this proceeding in the agreed amount of $200,000 within 28 days of the date of these orders. Catchwords: CORPORATIONS – registered management investment scheme – civil penalty proceedings – contraventions admitted by defendant – statement of agreed facts and joint submissions on relief and penalty before the court – need for court nevertheless to exercise judgment – declarations and orders made in agreed form. Legislation Cited: Corporations Act 2001 (Cth) Cases Cited: Australian Securities & Investments Commission v Rich [2003] NSWSC 186; 44 ACSR 682 Australian Securities & Investments Commission v Rich [2004] NSWSC 836; 50 ACSR 500 Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 90 ALJR 113 Speight v Gaunt (1883) 9 App Cas 1 Category: Principal judgment Parties: Plaintiff - Australian Securities and Investments Commission Defendant - Macquarie Investment Management Limited Representation: Counsel: Plaintiff - Mr JR Clarke SC with him Mr DG Healey Defendant - Mr N Hutley SC with him Ms RCA Higgins