Albarran v Members of the Companies Auditors & Liquidators Disciplinary Board & Anor

[2005] HCATrans 609

[2005] HCATrans 609

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S349 of 2005

B e t w e e n -

RICHARD ALBARRAN

Plaintiff

and

THE MEMBERS OF THE COMPANIES AUDITORS & LIQUIDATORS DISCIPLINARY BOARD

First Defendant

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Second Defendant

Summons

HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON MONDAY, 15 AUGUST 2005, AT 2.29 PM

Copyright in the High Court of Australia

MR N. PERRAM:   May it please the Court, I appear for the plaintiff.  (instructed by NOT Lawyers)

MR G.C. KAMENCAK:   Your Honour, I appear for the Members of the Companies Auditors & Liquidators Board.  (instructed by Australian Government Solicitor)

HIS HONOUR:   Yes.

MR COCHAK:   We are just confirming that the Board will be submitting to any order the Court may make save as to costs.

HIS HONOUR:   Yes.  In that respect, I should say that the Deputy Registrar has certified that she has been informed by a solicitor for the first defendant that it has advised that in relation to the hearing for an injunction restraining the Board from hearing the ASIC application the Board will submit to any order the Court may make save as to costs.  You can depart if you want to, otherwise you can stay and enjoy the fun.

MR S.J. GAGELER, SC:   If your Honour pleases, I appear with MR A.J. ABADEE for the second defendant.  (instructed by Australian Securities and Investment Commission)

HIS HONOUR:   Mr Perram, you are moving on an affidavit of John David Blessington filed on 20 July 2005?

MR PERRAM:   Yes, and also one of 9 August.

HIS HONOUR:   Yes.  Any objection to those affidavits, Mr Gageler?

MR GAGELER:   No, your Honour.

HIS HONOUR:   Do you want to cross-examine Mr Blessington?

MR GAGELER:   No, your Honour.

HIS HONOUR:   And you are relying on an affidavit of Georgina Elspeth Hayden filed on 15 August.

MR GAGELER:   Yes, your Honour.

HIS HONOUR:   Do you object to that, Mr Perram?

MR PERRAM:   No, your Honour.

HIS HONOUR:   You do not want to cross-examine Ms Hayden?

MR PERRAM:   Certainly not.

HIS HONOUR:   Is there any other evidence either side wishes to file?

MR PERRAM:   Your Honour, there are exhibits to both of Mr Blessington’s affidavits.

HIS HONOUR:   Yes.

MR PERRAM:   Yes, they have been filed and I should tender those as well.

HIS HONOUR:   Yes.  No objection, Mr Gageler?

MR GAGELER:   No, your Honour

HIS HONOUR:   I treat those three affidavits as read and I receive the two exhibits to Mr Blessington’s affidavits and they will be marked by the letters and numbers they have been given in the affidavits.

MR PERRAM:   May it please the Court.  Your Honour, formally I move on the summons.

HIS HONOUR:   Yes.

MR PERRAM:   I do that for two reasons.  First, because it is the originating process which seeks the stay of the proceedings before the Board – it does that by prayer 2 – but also to seek the order that the show cause be returnable before a Full Court.  It is convenient, in my submission, to deal with those two matters together because in substance the question which drives both is the same, namely, is this a real point.

HIS HONOUR:   It seems convenient to me to proceed with both.  Unless Mr Gageler says otherwise, let us do it that way.

MR PERRAM:   In an outline of submissions which was delivered to the Court just after 1 o’clock ‑ ‑ ‑

HIS HONOUR:   Yes, I have looked at that.  Do you have a copy of that?

MR PERRAM:   I am not sure if your Honour has those, but they – sorry?

HIS HONOUR:   Has Mr Gageler seen a copy?

MR GAGELER:   Yes, I have, your Honour, thank you.

MR PERRAM:   There is an error in the third paragraph which is sufficiently serious to warrant that I replace the copy.  The error makes fairly clear that the submissions once formed part of another document.  In those circumstances, if I could hand up another copy which removes that difficulty.

HIS HONOUR:   Yes.  It will be noted that Mr Perram is substituting for the so-called plaintiff’s outline of submissions on stay which was filed today a corrected version which I will place on the top of the whole bundle.

MR PERRAM:   At paragraph 11 I have hand corrected a reference to Part 8 so that it reads as a reference to Part 25.

HIS HONOUR:   Yes, we have to be careful.  Part 25 rule 5 of what?

MR PERRAM: Of the High Court Rules 2004.

HIS HONOUR:   Yes, fine, thank you.

MR PERRAM: Your Honour, one of the things which is missing from the submissions is any explication of the statutory scheme which underlies the functions of the Board. Can I hand up two extracts of statutory materials. One is from the ASIC Act and one is from the Corporations Act.  Can I develop the submission that the Board exercises the judicial power in two ways.  Can I first survey the provisions which govern the exercises of its powers and functions and, secondly, can I then take your Honour to the question of Rich.

Dealing with the ASIC Act first, if your Honour could start with section 203, your Honour will see that it is section 203 which constitutes the Board and it consists of a number of persons, the chairman, the deputy chairperson, a number of persons who are nominated by the Minister and a number of other persons. Section 205 provides for the term of the chairperson, the deputy chairperson and each other person is to be three years. Section 207 allows for the termination of those appointments on, if I could put it this way, misbehaviour grounds. Section 221 then confers upon the Panel chairperson or a member of the Panel in the performance of his or her functions the immunities of a Justice of this Court, which one assumes means immunity for suit in tort but probably not immunity from suit for judicial review. Section 204 is an omnibus provision. It has the effect of providing that:

The Disciplinary Board has the functions and powers conferred on it by or under the corporations legislation –

That expression is defined in a complicated way which I need not trouble your Honour with, but for present purposes it includes the Corporations Act and the ASIC Act. Section 210 deals with meetings of the Disciplinary Board. The relevance of that is that, as it happens, the function of dealing with these disciplinary matters is dealt with in what is called a meeting of the Board and that is governed by 210. Section 216(1) provides that:

A Panel of the Disciplinary Board constituted to hear a matter may, at a meeting of the Panel, hold a hearing –

Subsection (2) provides for the hearings to take place in private.  That is because, in my submission, the legislature clearly recognises that serious questions of reputation are involved in some of the functions which are performed by this Board.  I mention that now because that is a matter going to status quo on the injunction or stay question to which I will turn.  Subsection (3) allows a public hearing in limited circumstances. 

Section 218 deals with the procedure of the Board. It has to proceed with as little formality and technicality as possible. It is not bound by the rules of evidence and it is allowed to authorise persons to intervene in the proceedings. As a result of subsection (3) of that section, and particularly subsection (e), a person is entitled to be represented by a solicitor or barrister of this Court. Section 219 then deals with the position of witnesses and subsection (3) provides that:

A person must not, at a hearing, give evidence that is false or misleading. 

Then subsection (4) makes that an offence. 

Section 217 deals with the power to summons witnesses and it relevantly authorises the Panel to take evidence on oath.  That has a significant consequence as a result of certain provisions of the Crimes Act.  Can I just hand up an extract from the Crimes Act.  I am sorry, it has been printed off the page, your Honour.

HIS HONOUR:   That is all right.

MR PERRAM:   Section 31 and the sections which follow in the Crimes Act effectively deal with what might be loosely called Commonwealth perjury offences.  Your Honour will see that the definition in section 31 of a “judicial proceeding”:

judicial proceeding . . . includes a proceeding before a body or person acting under the law of the Commonwealth, or of a Territory, in which evidence may be taken on oath.

The consequence of that is for the purposes of the Crimes Act the proceedings of the Panel are a judicial proceeding and that has the consequence that a number of colourful offences which then follow relating to suborning witnesses and perjury apply to the proceedings of this Panel.  I have annexed as an example just one of those, section 35. 

Returning to the ASIC Act, section 220 makes it an offence to commit in effect a contempt of the Board or Panel. Pointedly – and this is against my argument – the power to punish that contempt is not one which is vested in the Board. It is necessary for a separate criminal proceeding to be commenced in a court which is vested with the relevant jurisdiction. Section 218(2) requires the Panel to observe the rules of natural justice. If they were not explicit, it would certainly have been implied. Finally, section 223 gives the Panel a power to award costs.

They are the provisions which currently regulate the manner of operation of the Board.  I will not trouble your Honour with the detail of it, but the Board was actually established under the 1989 Act and you will not find a provision in the 2001 Act establishing it.  It is an entity which had previously continued, but nothing for present purposes turns upon that. 

The functions which are relevantly conferred upon the Board or Panel are to be found now in Division 3 of Part 9.2 of the Corporations Act, which I have handed up, at section 1290 and following.  The relevant provisions there are 1292.  It allows the Board, if satisfied on the application of ASIC or APRA that a person has contravened a particular provision:

(i)       contravened 1287A; or

(ia)     failed to comply with a condition of the person’s registration as an auditor; or

(ii)      ceased to be resident in Australia; 

and then some other matters.  These ones do not arise directly in this case, but ‑ ‑ ‑

HIS HONOUR:   We are not directly worried about auditors.

MR PERRAM:   No.  Then subsection (2) is the relevant one.  I took your Honour to subsection (1) to highlight a symmetry it has with subsection (2), namely, in subsection (a) the reference to legal standards which are applied.  It is not just a one‑off that happens with the liquidators.  It is a general function the Board has.  So it is required to apply particular statutory provisions.  The relevant ones are of course in 1292(2) which provides:

The Board may, if it is satisfied on an application by ASIC for a person who is registered as a liquidator to be dealt with under this section that, before, at or after the commencement of this section:

(a)      the person has:

(i)       contravened section 1288; or

(ii)      ceased to be resident in Australia; or
(d)      that the person has failed, whether in or outside this jurisdiction, to carry out or perform adequately and properly:

(i)       the duties of a liquidator; or

(ii)      any duties or functions required by an Australian law to be carried out or performed by a registered liquidator;

Now, it is the plaintiff’s submission that each of the norms which are referred to in this subsection are norms which constitute pre‑existing legal rules.  That is a trivial submission in relation to section 1288.  It is probably a trivial submission in relation to the expression of the duties of a liquidator.  A question might arise if this were a peer review body as to whether this body also constituted the rules of a professional standard, as it were, in the way that the Legal Practitioners Tribunal used to do.  But this Board is not a peer review body.  Peer review bodies are still the accountants peer review bodies.  This is a statutory board given particular statutory functions and its functions do not include the promulgating or the creating of relevant accounting function standards.  So the plaintiff submits that each of these provisions are pre-existing legal standards. 

The power under 1292(2) then appears in the last phrase and it is a power:

by order, [to] cancel, or suspend for a specified period, the registration of the person as a liquidator.

The register to which that refers is maintained by ASIC and it is maintained under a provision which is section 1286.  That is not in your Honour’s material, but it is effectively just a provision which requires entries of names of persons and date of registration.  Subsection (3) provides for the maintenance of a register.  Your Honour will see that:

Where a person ceases to be registered as a liquidator, as a liquidator of a specified body corporate or as an official liquidator, ASIC must cause to be removed from the Register of Liquidators . . . the name of the person –

So the effect when an order is made under 1292(2) is that without any further intercession by a court the person’s name is removed from the register.  The act of ASIC in removing that name is not anything of a judicial function; it is a purely ministerial function that follows from the exercise of power by the Board.  Section 1297(1) deals with this topic too.  It says:

Subject to subsection (2) –

and some other provisions –

an order made by the Board cancelling or suspending the registration of a person as an auditor . . . comes into effect at the end of the day on which there is given to the person a notice of the decision –

Now, the plaintiff again points to that provision combined with the one I have just taken your Honour to as being a provision which indicates that this is a body whose decisions take effect of their own force and without the intercession of any other person. 

HIS HONOUR:   What are the appeal arrangements if a liquidator is dissatisfied with a decision of the Board cancelling or suspending his registration?

MR PERRAM:   There is a merits review appeal to the Administrative Appeals Tribunal.

HIS HONOUR:   And then law to the Federal Court?

MR PERRAM:   It is a question under section 44, a question of law to the Federal Court.  Of course you have your 39B remedies as well in relation to the Tribunal, but they are probably rather empty if there is an appeal on a question of law under 44.

HIS HONOUR:   Yes.

MR PERRAM: They are the powers of removal or cancellation. The Board has a power of reprimanding as well, which is to be found in section 1292(9). Without wading through the whole of the paragraph, one can see the power of admonition and reprimand in subsection (a). There is also a power to require them to undertake in a Soviet way re‑education. So they are the provisions which deal with the structure. Leaving aside the question of Rich, the plaintiff’s point in relation to these structures is that one has here a Board which takes pre-existing legal rules, applies them to facts which are to be found and comes to conclusions as a result of which it makes orders or determinations which take effect as a matter of their own right and without the need for the intervention or intercession of any other tribunal or decision‑maker.

That would be sufficient, in my submission, to ground an argument, without the question of Rich, that this body exercise the judicial power of the Commonwealth.  It is all a question of indicia.  There are some indicia against it.  The contempt indicia is certainly against the proposition that it exercises judicial power because the Board on any view does not have the power to punish contempt of itself, but a number of the other indicia heading in the opposite direction are clearly present.  It is a body which might be described as being, in my submission, finely balanced. 

The difficulty so far as the plaintiff is concerned is that the effect of a number of decisions of this Court establishes that deprivation of an office under a Commonwealth statute or Commonwealth legal regime is a disciplinary function and not one to which an argument about judicial power can be attached.

I have set out the relevant passages from R v White; Ex parte Byrnes (1963) 109 CLR 665 at paragraph 5 of my submissions. Your Honour will be familiar with the facts of that case, where effectively it was a public service case and the effect of the order which was being sought was to deprive the petitioner of an office under the Public Service Act, and he ran the very argument I seek to run now, namely, that the Public Service Tribunal exercise the judicial power of the Commonwealth and he was met with the refrain that this was a disciplinary function and disciplinary functions did not infringe upon the judicial power. 

It would be, in my submission, a fair summary of the legal profession’s attitude to disciplinary proceedings until relatively recently that they involve an element of protection of the public rather than an element of punishment.  It is on that basis, for example, that it has always been held in disciplinary proceedings that a practitioner has no entitlement to claim the privilege against self‑incrimination, the argument being that the practitioner is not being punished; the practitioner is simply being sidelined for the protection of others.

The plaintiff’s argument in relation to that aspect is that this Court’s decision in Rich demonstrates that the dichotomy between the concept of protection of the public and the concept of punishment has proved to be a false one.  Without rehearsing what the Court said in Rich at any great length, I have set out the crucial provisions in paragraph 7 of my submission and the most eloquent part of those probably is the quotation which appears towards the end of page 6 where the Court is discussing the status of the Full Federal Court’s previous decision in Kippe.  The last bit their Honours say:

The Full Court of the Federal Court held that a proceeding which might result in a banning order was to be characterised as “‘protective’ in purpose and not as one for the imposition of a penalty”.  For the reasons given earlier, that conclusion was wrong.  Kippe should be overruled.

Now, it is important not to get over‑excited about what Rich holds.  One apprehends when one reads Rich a considerable care in the reasons not to make any statements which were overly extravagant or which might be seen as going too far.  Rich probably only strictly establishes the proposition that the privilege against discovery in relation to penalty proceedings is available in relation to proceedings of the type which Mr Rich was concerned in in that case.  It would follow, in my submission, without too much difficulty that it is likely to follow from that decision for the privilege against self-incrimination and is probably also applicable in those proceedings.  It was not necessary to decide that in Rich’s Case. 

Now, if that be so, then one has a similar application of reasoning in this case, so one ends up with a Board who takes sworn evidence, whose contempts are punished criminally, who applies fixed legal rules to pass findings of fact and who relevantly can have various privileges against self‑incrimination taken before it.

Once the dichotomy between punition and protection is swept away, as, in my submission, Rich’s Case does sweep it away, the rationale underlying White’s Case and the cases which follow it disappears.  That is not to say that the result is necessarily different in those cases.  One possible thing which could occur as a result of Rich would be that the whole basis of disciplinary proceedings could be revisited or the previous rulings or decisions effectively affirmed but on a basis which no longer depended upon concepts such as protection of the public or punishment.

The plaintiff’s point at the moment is that the rationale which underlies all of the previous cases in this area really no longer works, resting as it does on a dichotomy which has been exposed as being false.  For that reason, the plaintiff submits that his argument is a live argument and certainly cannot be said to be specious or lightweight.  It does not guarantee him, by any means, success.  That is clear as well.

HIS HONOUR:   Have you finished on what you might call the constitutional point?

MR PERRAM:   Yes.

HIS HONOUR:   Why should it not go to the Federal Court?

MR PERRAM:   Because the Federal Court is bound by this Court’s decision in White to hold that deprivation of a public office does not infringe the judicial power, so the result is inevitable in the Federal Court.  The Federal Court has held as much in the Tankey Case to which I have referred.  It has not held that directly, but it is one of those situations where the court would be put in the position of looking up, as it were, perceiving that perhaps the reasoning in the earlier decisions was no longer effective but still being bound by the precise holding in those cases.  In my submission, the Full Federal Court certainly could not reach a decision contrary to White that would allow it to conclude that the judicial power was indeed exercised by this Board.  That is the answer to that argument. 

If I could just make two further submissions.  I have referred your Honour to a decision of Justice McHugh’s in Re Australian Nursing Federation 112 ALR 177 as to the relevant principles to be applied when one is seeking a stay of proceedings as opposed to a stay of an order. There is a useful brief summary of the relevant principles at page 184 to185. There is an enduring debate as to whether the scope of the inherent power to grant a stay of proceedings differs from the rule‑based power. There seems to be an indication in some of the authorities to which his Honour refers at page 185 at about line 10 that the power to obtain a stay under the Rules, previously Order 55, now Part 25. That is a somewhat easier test to obtain. Nevertheless, his Honour says – and I have to face up to this – it is a power to be used sparingly and with caution.

Here, in my submission, a prima facie case is made out and there is a real reason not to remit it to the courts below because the courts below simply do not have the tools to finish off what Rich may have commenced in relation to disciplinary cases and it would be much tidier for all concerned if this Court were to say at the outset what the consequences in disciplinary proceedings was to be.

Thirdly, the status quo favours the granting of the stay.  It does that for, in my submission, two reasons.  The first is a cost reason.  Secondly, the powers of this Board include, as a matter of authority and as a matter of reality, the ability to traduce the plaintiff’s reputation quite seriously.  One of its powers is a power of public admonition and it would be no comfort to the plaintiff at all, if he were to be publicly admonished, to have that admonition, as it were, quashed by certiorari after the event.  A public admonishment is not something which in its nature is susceptible to retraction.  For that reason, quite apart from the cost question, the status quo favours the making of the orders.  May it please the Court.

HIS HONOUR:   Mr Gageler, I think it might be convenient, unless you want to take another course, to deal with two issues, namely, why not the Federal Court and, secondly, should there be a stay?  In other words, unless you want to raise it later, we might put on one side the merits of the constitutional argument.

MR GAGELER:   Yes, of course, your Honour.  Your Honour, why not the Federal Court?  There are two orders sought in the summons.  One is an order that the application for an order to show cause be returnable before a Full Court of this Court.  That is a course which we do not oppose and we do not oppose it because, as your Honour will have seen from Ms Hayden’s affidavit, the issue sought to be raised in this case is one which has the potential to affect a considerable number of cases which are in the pipeline.  Although there is absolutely no concession on our part that there is anything in the constitutional point, it is a constitutional point that is festering and the experience of my client has shown that in these sort of matters, until such a point is dealt with at a very high appellate level, it is likely to continue to fester, particularly when this plaintiff and other persons in similar positions seek to rely upon a recent decision of this Court to undermine what has always been understood to be established authority.

So, your Honour, it is unlikely that the matter will be put to rest absent a decision of the Full Court of the Federal Court followed by a special leave application.  We see a shorter route as being straight to the Full Court of this Court.

HIS HONOUR:   I am not so sure it is actually a shorter route because single judges of the Federal Court in the companies list, or whatever they call it, can hear things very quickly and even the harshest critic of the Federal Court of Australia could not accuse it of being slow in hearing appeals.

MR GAGELER:   Yes.  Your Honour, we just want an appellate decision quickly, or a decision at an appellate level quickly, and we really do not mind which route is taken.

HIS HONOUR:   A lot of people would like the Full Court to decide their cases just after the summons had been filed.  Not everyone can ‑ ‑ ‑

MR GAGELER:   I know.  So if your Honour were minded to send it to the Federal Court, we would not be opposing it in any way.

HIS HONOUR:   Now, stay?

MR GAGELER:   Stay.  Your Honour, there seemed to us to be two virtually insurmountable obstacles to the grant of a stay.  One is that our learned friend’s only point is a constitutional point and, irrespective of the merits of the constitutional point, the principle as stated by Chief Justice Mason in Castlemaine Tooheys Ltd v South Australia 161 CLR 148 – and your Honour has it – the sentence that begins at the bottom of page 155, that is:

In the absence of compelling grounds, it is the duty of the Court to respect, indeed, to defer to, the enactment of the legislature until that enactment is adjudged ultra vires.

That was said in the context of an application for an interlocutory injunction but the principle is a principle of general application to interlocutory orders based upon the alleged invalidity of legislation.  His Honour applied the same principle in another interlocutory injunction case, Australian Capital Television 66 ALJR 214 at 216 – your Honour has that, I think.

HIS HONOUR:   There does not seem to be any statement of principle on that page.

MR GAGELER:   I am so sorry, your Honour, 217, left‑hand column, at the bottom of the page.

HIS HONOUR: So you really say that section 1292 of the Corporations Act and section 218 of the Australian Securities and Investments Commission Act are statutes which are in a sense being enforced against the plaintiff and to grant a stay in the nature of an injunction would offend what the Chief Justice said there?

MR GAGELER:   Exactly. A case very similar to the present is, if your Honour has 43 ALD 235, a decision of Justice Hill in the Federal Court where there was an application almost identical in nature to the present.

HIS HONOUR:   It is Artinian v The Commonwealth?

MR GAGELER:   Yes, Artinian.  It was an application to stay proceedings of a body under the Health Insurance Act, the ground being that identified at page 238.  It is really the same issue here.  It was said that the body was exercising judicial power, amongst other things.  His Honour dealt with that at page 243, applying the passages to which I have already taken your Honour.  So, in our submission, that is really a complete answer to a case for a stay.

That is one aspect of it.  The other aspect of it – and this is really another aspect of Castlemaine Tooheys itself, and your Honour has had occasion to go to this in the relatively recent past. In 161 CLR at 154 Justice Mason said that:

in some cases where the public interest would be adversely affected by the grant of an injunction the plaintiff may need to show a probability, even a distinct probability of success, in order to obtain an interlocutory injunction.

In our respectful submission, again, the principle there stated ought not be too narrowly confined to an interlocutory injunction but rather ‑ ‑ ‑

HIS HONOUR:   Yes.  I accept the force or your citation.  Of course to evaluate that one would have to get into the merits of Mr Perram’s ‑ ‑ ‑

MR GAGELER:   Not really, because there is, in our respectful submission, a public interest in having ‑ ‑ ‑

HIS HONOUR:   I agree with that, but the Acting Chief Justice says, one, if the public interest is adversely affected – I am prepared to accept that in some sense that is so here – the plaintiff has to show a probability or a distinct probability of success, and Mr Perram was extremely responsible in the way he put his arguments.  There was nothing triumphalist about what he said.  He said he had an arguable point.

MR GAGELER:   Indeed, your Honour, I think he quite fairly shies away from any suggestion that there is a probability of success.  Indeed, that is why he seeks only to have the matter referred to the Full Court rather than have your Honour grant what used to be called an order nisi but is now called an order to show case.  So he implicitly accepts that he does not rise to the threshold which is one of sufficiently arguable which is significantly less than ‑ ‑ ‑

HIS HONOUR:   Let us not upset Mr Perram too much by saying he accepts this and he accepts that.

MR GAGELER:   Yes.  Your Honour, there are those two, in our respectful submission, insurmountable hurdles, but if one just looked more traditionally at the balance of convenience here the only prejudice that is pointed to in the evidence – and this is in the evidence of Mr Blessington in his affidavit of 20 July 2005, paragraph 7 – is the cost of preparing for a hearing.

HIS HONOUR:   Costs plus damage to reputation.  I think this ‑ ‑ ‑

MR GAGELER:   It is something that has just been raised but let me deal with costs first.  The costs, your Honour, have not been quantified.  They have not been shown to be oppressive and these proceedings in themselves show that the plaintiff is prepared to spend money.

HIS HONOUR:   Do you accept that, whatever ultimate court determines the validity of Mr Perram’s constitutional point, if the plaintiff incurred costs and, as it were, threw them away, that the plaintiff would get them back from ‑ ‑ ‑

MR GAGELER:   No.

HIS HONOUR:   You do not.  You say neither the Board nor ASIC would ‑ ‑ ‑

MR GAGELER:   I am not giving any undertaking, your Honour. There will be some costs that will be potentially thrown away, but that is just one unquantified aspect of the balancing exercise. That is one thing, your Honour. So far as reputation is concerned, Mr Perram correctly pointed out that any decision of the Board is subject to merits review by the Administrative Appeals Tribunal. That is section 1317B of the Corporations Act.  Once the matter is before the Administrative Appeals Tribunal, any decision of the Board can be stayed within the discretion of that Tribunal under section 41 of the AAT Act pending the determination of the review by the AAT.  So the damage to reputation, if it were to occur, is a long time in the future.

HIS HONOUR:   I understand your submission.  I think there is something in what Mr Perram says, but in the real world, stay or no stay, a stain can be wiped out not completely by ultimate success, particularly ultimate success on a constitutional point.

MR GAGELER:   Well, your Honour is engaged obviously in a balancing exercise but your Honour has to bear in mind that there is nothing special about Mr Albarran.  Nothing is suggested that makes his case different from any of the other 12 matters before the Board or 21 matters in the pipeline.

HIS HONOUR:   Yes, 21 potential matters.

MR GAGELER:   One further point to be weighed in the balance, and it is only another factor, is that if your Honour were to look at – I think it is Annexure C or exhibit C.  It is the affidavit ‑ ‑ ‑

HIS HONOUR:   JDB1, or is it Ms Hayden?

MR GAGELER:   I am sorry, your Honour, it is JDB, annexure C.  Your Honour sees a ‑ ‑ ‑

HIS HONOUR:   Your point is that on 7 February, or possibly some earlier date, the Board directed a timetable just on the material filed.  It does not appear necessarily from the timetable as being fully complied with but no one is asserting that it is not possible for the matter to proceed on 29 August but for the present application.

MR GAGELER:   No, that is right.

HIS HONOUR:   Do you say that if this is an available point it could have been taken in January or February and it might well be on its way to the Full High Court now?

MR GAGELER:   Yes, and it ought not now delay matters.  Your Honour, where this may not necessarily be a case for an undertaking, it is not a case where the plaintiff is proffering any form of undertaking in return for holding the status quo.  If the Court pleases.

HIS HONOUR:   Yes.  Mr Perram, is there anything in reply?

MR PERRAM:   Just dealing with the last point first, the plaintiff offers no undertaking and no principle requires that such an undertaking should be granted in relation to seeking a stay of a proceeding before the Tribunal.

HIS HONOUR:   I have to disagree on that.  I think if you wanted a stay, it would be quite normal for an undertaking to prosecute proceedings with urgency or expedition.

MR PERRAM:   In relation to, for example, an appeal from the intermediate appellate court to this Court, that would be so.

HIS HONOUR: But in relation to a body which under section 218 is supposed to proceed expeditiously, because, for example, whether it be a High Court or a Federal Court challenge, if it were not prosecuted expeditiously, and I do not intend to be offensive to your client, but the allegations have been made, they have not been cleared up, ASIC wants a certain result – at the highest, at least, it wants a certain result. There is a public interest in either that result being achieved or your client being cleared. It should not be held over for years in doubt, in abeyance.

MR PERRAM:   I am sure if I turned behind me I can obtain instructions to give an appropriate undertaking, if I might do that in a moment.  Can I deal then with the Castlemaine Tooheys question.  My learned friend took your Honour to the well‑known passage at the foot of page 155 and then over to 156 but there is a crucial passage which then follows in relation to criminal prosecutions.  What the Acting Chief Justice then said at about point 2 on the page:

It is perhaps undesirable that prosecutions should be commenced whilst the validity of the relevant sections is under challenge in proceedings pending in this Court.  But there may be circumstances not readily to be foreseen by the Court which would justify the commencement of prosecutions in which event they would ordinarily be adjourned pending the determination of validity.

Now, that of course, is not precisely on point with this situation but it, in my submission, underscores something which really marks this kind of case out from the kind of injunction suit with which Castlemaine Tooheys was concerned.  That case was concerned with an injunction to restrain the enforcement of what I think Professor Hart might have called a primary rule of obligation.  These proceedings are not concerned to restrain the enforcement of such a primary rule.  These proceedings are concerned to prevent a tribunal proceeding to deal with a matter.  There are no specific rules of the Commonwealth in relation to actual conduct which the plaintiff seeks to impugn. 

Now, it is true that the decision of Justice Hill did not draw that distinction, but the passage to which I have just referred, in my submission, must be a recognition that there is a matter of significant distinction between staying the proceedings of the tribunal who rules upon the application of particular rules and an application to restrain the enforcement of an actual rule.

One can see the truth of that submission when one looks at the powers in 1292 which are all in terms discretionary. Section 1292 imposes no obligations on the plaintiff and it also, in effect, confers no rights. He does not, therefore, seek to prevent or to enforce anything in particular. He simply seeks to have effectively a body not consider a matter before the validity of that body’s jurisdiction has been determined. As I say, although it is not precisely on all fours with the paragraph to which I have just referred, in my submission, there is no relevant distinction between the kind of criminal proceedings referred to at page 156 and proceedings of this kind which are, if not actually criminal, at least, so far as the plaintiff’s argument goes, penal. I make the same point in relation to the passage which my learned friend took your Honour to at page 154. I concede the public interest to which he has referred but, again, it takes one into that balancing exercise.

My friend also referred to the possibility of a stay being obtained from the Administrative Appeals Tribunal.  That of course is not really an answer to the argument which is being put.  If it is said to be impermissible to grant a stay in this place, it will presumably be said to the AAT to be impermissible to grant a stay in that place.  I know my learned friend would

never make a submission based upon this case, but one would assume that the argument would be put to the Administrative Appeals Tribunal that it had no power to consider a question of constitutional law.  That is a controversial proposition.  In any event, the short point in relation to it is that it is difficult to be clear at the level of necessary certainty as to what the likely disposition of that kind of application in the future might be.

HIS HONOUR:   Is it not possible to institute and prosecute a Federal Court challenge simultaneously, as it were, with the Board’s proceedings and any appeal on the merits to the AAT?  It seems to be common ground that you cannot ask the Board to hold that it has no jurisdiction.  There may or may not be a similar problem for the Tribunal.  The controversy can scarcely be said to be moot, particularly if the matter is not dismissed in this Court but remitted by this Court to the Federal Court.

MR PERRAM:   I will not repeat what I have said in relation to what the Federal Court would be able to do with it, but that would be an answer in relation to that.

HIS HONOUR:   Yes, I understand your argument.

MR PERRAM:   The Tribunal’s functions would be precisely the same as the Board’s functions.  It simply picks them up and makes them its own, so the position would be the same before it.  In relation to the delay question, it is true that had the point been thought of in February it could have been taken.  All I can say in relation to that is that I do not think it was known at that point.  It certainly could not be taken before the Board.  Can I just have some instructions?

HIS HONOUR:   Certainly.

MR PERRAM:   I do not have those instructions but I am told they are coming.

HIS HONOUR:   Yes.  I think if it becomes crucial we can revisit that question.

MR PERRAM:   Yes, your Honour.  Those would be my submissions.  I do have those instructions.

HIS HONOUR:   Thank you. 

The plaintiff has filed an application to show cause on 20 July 2005 in effect seeking an order nisi for prohibition against the first defendant further conducting certain proceedings. The plaintiff moves on a summons dated 20 July 2005 seeking an order that that application be removed into the Full Court of the High Court. The plaintiff relies on affidavits of John David Blessington filed on 20 July and on 9 August 2005 and the second defendant relies on an affidavit of Georgina Elspeth Hayden filed on 15 August 2005. Notices have been given to the Attorneys-General of the Commonwealth and the States under section 78B of the Judiciary Act 1903 (Cth). The Attorney-General of the Northern Territory has also been notified. Responses have been received indicating a lack of intention to intervene from four of the Attorneys. A reasonable time has elapsed for the others to consider the question of intervention and so section 78A and section 78B present no bar to this hearing.

The background is that on 23 December 2004 the Australian Securities and Investment Commission, the second defendant, lodged with the first defendant, the Companies Auditors & Liquidators Disciplinary Board, a statement of facts and contention in support of an application which was filed on 6 January 2005 to cancel the plaintiff’s registration as a liquidator pursuant to section 1292(2)(d) of the Corporations Act 2001 (Cth). It relied on certain allegations relating to the plaintiff’s conduct as a participant in the external administration of a particular company. It is alleged that the plaintiff was precluded from being appointed as administrator by reason of a conflict of interest and created a so-called “contrived nominee” arrangement to permit him to act. In the alternative, it is alleged that he failed to disclose conflicts of interest. There were allegations in relation to another company which are not now maintained.

On 25 January 2005 a pre-hearing conference was held by the Board.  On 7 February the Board informed the plaintiff’s solicitor that a hearing would be held on 29 August to last from five to seven days.  It also directed a timetable for the filing of evidentiary and other material.  Since that time, the Commission has made allegations adverse to the plaintiff in relation to two other companies, having made allegations against a third but since abandoned them. 

On 5 July the plaintiff’s solicitor asked the Board whether it would stand the proceedings against the plaintiff over to await the outcome of an application by Vanda Gould to this Court, S295 of 2005. That challenges the validity, among other provisions, of section 1292 of the Corporations Act. In a letter of the same date to the Commission, the plaintiff’s solicitor contended that it was unjust for 29 August proceedings against the plaintiff to go on in view of Ms Gould’s challenge to the validity of section 1292. Both letters threaten an application to this Court in the event that the request for an adjournment was not complied with.

On 8 July the Commission refused to apply for an adjournment of the proceedings and on 18 July the Registrar of the Board refused to stay the proceedings until the outcome of Ms Gould’s proceedings were known.  As a result, on 20 July the present proceedings started.  They are based on a contention that for the Board to consider whether to remove the plaintiff from the register of liquidators would impermissibly involve it in exercising the judicial power of the Commonwealth. 

On 8 August the Board, after receiving written submissions from the parties, communicated to them its refusal of the plaintiff’s request for an adjournment of the proceedings and it said it would not deal with the constitutional point raised. 

Mr Perram, on behalf of the plaintiff, has, both in writing and orally, outlined the contentions on which he would wish to rely before the Full Court.  They are that courts below the High Court are bound by prior authority, namely R v White; Ex Parte Byrnes (1963) 109 CLR 665 and R v Hegarty; Ex Parte City of Salisbury (1981) 147 CLR 617, to hold that the Board’s proceedings do not offend Chapter III of the Constitution because they are proceedings which are disciplinary in character.

The plaintiff contends that in Rich v Australian Securities and Investments Commission (2004) 209 ALR 271 this Court cast considerable doubt on the validity of the distinction between punitive or disciplinary and protective proceedings and that that reasoning in turn exposes those earlier decisions of this Court to a contention that they are erroneously decided. The plaintiff submits that the Full Federal Court accepts those authorities as binding on it to hold that the Board’s proceedings would not offend Chapter III.

It is undesirable, I think, to go into the merits of these contentions by the plaintiff.  The plaintiff submits that it has, as it were, an arguable or prima facie case for invalidity.  Accepting that that is so, the outcome of today’s application really turns on two questions.  The first is whether it is desirable to remit the matter to the Federal Court.  The Commission does not oppose the matter being sent to the Full Court of this Court and, for that matter, does not oppose the matter being sent to the Federal Court.  It states its concern as being simply that the matter be resolved by the Full Court of the High Court sooner rather than later on the ground that the constitutional point, while without merit, will simply cause trouble until it is disposed of.  The plaintiff contends that it would be wrong to send the matter to the Federal Court because it would see itself as bound by earlier High Court authority. 

The decisions in the two High Court cases and in the Federal Court cases which are said to treat them as binding are decisions which turn on the evaluation of particular Commonwealth statutes of which the Corporations Act 2001 (Cth) is not one. An evaluation of whether a particular Commonwealth statute impermissibly confers judicial power on bodies which are not Chapter III courts, among other things, calls for a careful construction of the specific statute involved. That task is a field of expertise which the Federal Court has specialised skills in. This Court would be assisted by the opinions of the Federal Court on the constitutionality of section 1292 of the Corporations Act. 

The parties are right to evince concern about the balance of delay, as it were.  The state of affairs in this Court is such that it is unlikely that any urgent hearing could be given to the parties by the Full Court for some months.  On the other hand, it is well known that single judges of the Federal Court are able to give company matters urgent attention.  It is also well known that the Full Federal Court is able to hear appeals, certainly in Sydney, quickly and in the circumstances, if the matter is prosecuted with expedition, in the Federal Court there is unlikely to be much delay if the route of the Federal Court followed by a special leave application is taken as compared with the route of a reference of the proceedings into the Full Court of this Court.

I turn to the question of whether or not there should be a stay of the proceedings on 29 August 2005. The plaintiff points to two particular detriments. One is that costs will be incurred in preparing for 29 August 2005 and those costs will be irrecoverable in the event that it is later found that the Board had no power to conduct those proceedings because its activities collide with Chapter III of the Constitution. The second point is that the plaintiff’s reputation will be adversely affected if the Board finds against him, even if he either succeeds on a merits review before the Administrative Appeals Tribunal or succeeds in having any decision of the Board set aside as being contrary to Chapter III. There is some force in both of those points. On the other hand, it is necessary to bear in mind that the Board is proceeding under section 218 of the Australian Securities and Investments Commission Act 2001 and section 218(1)(a) provides that the proceedings before the Board are to be conducted:

with as much expedition, as the requirements of the corporations legislation . . . and a proper consideration of the matters before the [Board] permit. 

It is true that on 6 January the Commission indicated that it did not see the proceedings as being urgent.  What may not have been urgent in January, I think, is starting to become urgent now, so that a stay would tend to frustrate the functions of the Board to the extent that they call for an urgent determination of the matter before it.  It is obvious that it is in the public interest that allegations of failure of duty by liquidators should be determined in a timely and expeditious manner both from their point of view and from the point of view of others. 

There has been delay on the part of the plaintiff in at least this sense, that the constitutional point now relied on so far as the evidence reveals was not first raised until July.  Had it been raised early in the year, a process of challenge before whatever court the challenge took place could have been largely completed.  The plaintiff simply says that the point had not occurred to his advisers at that time.  Accepting that, it still remains objectively the case that delay has, unfortunately, taken place. 

It is possible, should the plaintiff be unsuccessful before the Board, that a form of stay can be obtained from the Administrative Appeals Tribunal protective both of the plaintiff and of the public interest.  The plaintiff says to that that if the Board rightly refuses to consider the constitutional point it would not be open to the Tribunal to do so either.  But, on the other hand, the remission of the matter to the Federal Court will permit the constitutional question to be determined, subject perhaps to the final decision from this Court, concurrently, as it were, with the prosecution of the Board’s proceedings. 

The Commission filed evidence from Ms Hayden stating that there were 12 people in a similar position to the plaintiff who had proceedings before the Board and also stating that the Commission was investigating 21 other liquidators and auditors.  If proceedings were stayed before the Board in relation to the present plaintiff, it would seem likely that the other 12 people would have their proceedings stayed if they wanted them stayed and that any of the 21 against whom the Commission proceeds will also be able to obtain a stay.  Ms Hayden did not say so in terms but it follows that, in effect, the activities of the Board and to some extent the Commission in this field would be obstructed if a stay were granted.

Mr Perram and Mr Gageler who appeared for the Commission took the Court to such decisions as Castlemaine Tooheys Limited v South Australia (1986) 161 CLR 148 at 154 and 156, to Australian Capital Television Pty Limited v The Commonwealth (1991) 66 ALJR 214 at 217, and to the decision of Mr Justice Hill in Artinian v The Commonwealth (1996) 43 ALD 235 at 243. Those authorities make the point that it is the court’s duty to defer to the enactment of the legislature until that enactment is adjudged constitutionally ultra vires. Mr Perram countered by contending that this was not a case where what he called usefully enough “a rule of primary conduct” is being enforced. It was simply a question of whether the provisions of section 1292 should be held up for a time while the validity of the provision is examined. I do not see that particular debate as being determinative of the outcome.

Taking into account the various factors which the parties have relied on and which I hope I have outlined above, the balance appears to me to point against a stay.  I should indicate that Mr Perram towards the end of his submissions did indicate that he had instructions to undertake to the Court to prosecute the matter expeditiously as the price of obtaining a stay.

In those circumstances, what order should be made?  Simply that it be remitted to the Federal Court?  One possibility is to dismiss the proceedings and let them start again in the Federal Court but there does not seem to be much point in that.

MR GAGELER:   We would be content with your Honour perhaps dismissing the summons of 20 July with costs and an order remitting the proceeding to the Federal Court in the usual form.

HIS HONOUR:   I order:

1.        That the summons filed on 20 July 2005 be dismissed with costs;

2.        That the proceedings be remitted to the Federal Court of Australia; and

3.        That that remitter be in the usual form.

If there is any difficulty about the third order, the matter can be relisted and we will tie it up.  There is a form – I am sure you are familiar with it, Mr Perram – that ties up all the loose ends but I do not think the loose ends are of any substantive importance.  Any other order?  Thank you very much.  The Court will now adjourn.

AT 3.33 PM THE MATTER WAS CONCLUDED