Abela and Australian Prudential Regulation Authority - [2008] AATA 653

Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 653
ADMINISTRATIVE APPEALS TRIBUNAL )
) No: N2006/0739

GENERAL ADMINISTRATIVE DIVISION )
RePaul Mario ABELA

Applicant
AndAustralian Prudential Regulation Authority

Respondent
DECISION
TribunalProfessor GD Walker, Deputy President and Mr SE Frost, Member
Date29 July 2008
PlaceSydney
DecisionThe decision under review is set aside.
..............[sgd]................................
Professor GD Walker
Deputy President

CATCHWORDS – Australian Prudential Regulation Authority disqualification – whether applicant is a fit and proper person to be or act as a director or senior manager of a general insurer – whether applicant’s conduct in relation to HIH demonstrates that he failed to show the judgement, probity and competence to adequately perform the functions of a director or senior manager of a general insurer – complaints about applicant’s behaviour not made out – decision under review is set aside.
…
RELEVANT ACT/S:
Insurance Act 1973 (Cth) (the Act): ss 2A, 24, 25A, 29, 30, 63
…
CITATIONS
Hughes & Vale Pty Ltd v New South Wales (1955) 93 CLR 127
Re Burroughs and Australian Prudential Regulation Authority [2007] AATA 1960
Kamha v Australian Prudential Regulation Authority [2005] FCAFC 248
…
AUTHORITIES
Prudential Standard GPS 520
…
REASONS FOR DECISION

19 July 2008

Professor GD Walker, Deputy President and Mr SE Frost, Member

Basic facts

1.      The applicant Mr Paul Mario Abela is currently a director within the tax and legal services division of PricewaterhouseCoopers (PwC) in Sydney. He holds the degrees of Bachelor of Economics, Bachelor of Laws and Master of Laws from the University of Sydney. He has been a solicitor and chartered accountant since 1989. He worked in legal practice for about two and half years with the law firm of Mallesons Stephen Jaques.
2.      Between March 1994 and mid-September 2001, he was employed by the HIH insurance group (HIH). During the financial periods ending 30 June 1999 and 30 June 2000 he held the position of group tax counsel.
3. A delegate of the respondent on 27 March 2006 disqualified the applicant under s 25A(1) of the Insurance Act 1973 (Cth) (the Act). The applicant applied for internal review of that decision and on 25 May 2006 a delegate of APRA confirmed the applicant’s disqualification dated 27 March 2006 under s 63(4) of the Act.
4.      On 22 June 2006 the applicant lodged with this tribunal an application for review of the decision.
5.      APRA contended that the applicant is not a fit and proper person to be or to act as someone referred to in ss 24(1)(a), (b) or (c) of the Act for the following two reasons:
(a)First, the applicant's conduct in relation to HIH’s practice of “netting-off” of inter-company balances demonstrates that he failed to show the judgment, probity and competence to adequately perform the functions of a director or senior manager of a general insurer within the meaning of s 24(1)(a) of the Act. In this context “netting-off” refers to the practice, when there is a series of loans…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] AATA 653
Decision Date: 29 July 2008

CaseChat Overview and Summary

This matter involved a challenge by Mr Paul Mario Abela to a decision by the Australian Prudential Regulation Authority (APRA) disqualifying him from being or acting as a director or senior manager of a general insurer. The Tribunal set aside APRA's decision, finding that Mr Abela was a fit and proper person to hold such a position. APRA had disqualified Mr Abela on the basis that his conduct in relation to two issues demonstrated he lacked the judgment, probity and competence required of a senior manager. The first issue related to Mr Abela's conduct in relation to HIH Insurance's (HIH) practice of "netting off" of inter-company balances. The second related to his conduct in relation to HIH's accounting treatment of its future income taxation benefits (FITB). The Tribunal found that APRA's criticism of Mr Abela's conduct in relation to the netting-off issue was without merit. It also found that none of Mr Abela's behaviour in relation to the FITB issue warranted the criticism levelled at him by APRA. The Tribunal was not satisfied that disqualifying Mr Abela served the purpose of protecting policyholders, given that he did not consider himself qualified to perform the role of senior manager in an insurance company and had no intention of performing such a role in the future. The Tribunal set aside APRA's decision.

Orders