Applicant N2003/810 and Australian Prudential Regulation Authority
[2004] AATA 178
•23 February 2004
Administrative
Appeals
Tribunal
DIRECTIONS DECISION [2004] AATA 178
ADMINISTRATIVE APPEALS TRIBUNAL )
) N2003/810
GENERAL ADMINISTRATIVE DIVISION ) Re APPLICANT N2003/810 Applicant
And
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY
Respondent
DIRECTIONS DECISION
Tribunal Mr J Block, Deputy President Date23 February 2004
PlaceSydney
Decision The Tribunal directs the Respondent to comply with paragraphs (1), (2) and (3) but not paragraphs (7) and (8) of the Summons to produce issued by the Applicant against the Respondent on 8 December 2003.
[sgd] Mr J Block, Deputy President
CATCHWORDS
SUPERANNUATION – Summons to produce – matter part-heard – Applicant the subject of an independent investigation - two categories of documents called for - requirement for administrative decision maker to have all relevant material before him/her discussed – Respondent relying on s56 APRA Act to withhold documents –meaning of ‘necessary’ in s56(8) APRA Act - whether issuing of a Summons constitutes consent for the purposes of s56(4)(b) APRA Act – ‘first category’ documents required to be produced – ‘second category’ documents validly withheld pending completion of the investigation.
Superannuation Industry (Supervision) Act1993 section 27
Australian Prudential Regulation Authority Act 1998 section 56
Lego Australia Pty Ltd and Ors v Paraggio and Ors 52 FCR page 542
Canwest Global Communications Corp and Ors v Australian Broadcasting Authority and Anor [1997] 540 FCA (16 June 1997)
Minister for Aboriginal Affairs v Peko-Wallsend (1986) 62 CLR 24
Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223
REASONS FOR DIRECTIONS DECISION
23 February 2004 Mr J Block, Deputy President 1. The term “relevant decision” means the decision of Mr Wayne Byres made on 22 January 2003 pursuant to section 27C of the Superannuation Industry (Supervision) Act 1993 (“SIS Act”) to vary the Instrument of Approval of the Applicant and in particular condition 2 of the schedule thereto, prohibiting the Applicant from taking or assuming the trusteeship of any further superannuation funds, and the decision by Mr K Chapman made on 22 April 2003, affirming the decision previously made by Mr Wayne Byres.
2. This matter is currently part-heard. Hearings commenced on 17 November 2003, the matter having been listed for that day and the following two days. On the third day, and when it was clear that the hearings would take a number of further days, the Applicant applied for a stay of the relevant decision. That application was granted subject to the relevant conditions, and being those set out in clause 2 of the decision (“the Stay Decision”) pursuant to which the stay was granted.
3. Clause 8 of the Stay Decision reads as follows:
“8. The evidence before the Tribunal is already very extensive indeed. The T‑Documents are lengthy and comprehensive; so for that matter are the statements of witnesses; they all pale into insignificance by comparison with the exhibits of which there are already a considerable number and including an exhibit referred to and described as the “Agreed Bundle” and which consists of six large volumes and comprising 3,000 closely typed pages although. Each volume of the Agreed Bundle commences with page number one so that obviously enough, the transcript contains references to the Agreed Bundle by reference to each of the relevant volume and the relevant page in that volume.”
4. The matter has been re-listed to be heard on a number of hearing days in March 2004. On 8 December 2003, the Applicant issued a Summons to produce (“the Summons”) against the Respondent calling for the production of the books, documents or things referred to in the Summons, as follows:
“(1) All files created or held by the Australian Prudential Regulation Authority (“APRA”) relating to the reviews conducted of The Applicant by APRA in May 2000, August 2000, March 2001, May 2001 and November 2002.
(2) All files created or held by APRA relating to the consideration of the applicant’s application to be an approved trustee under the Superannuation Industry (Supervision) Act 1993 (Cth) (the “SIS Act”) and the granting to the Applicant of an Instrument of Approval.
(3) All files being correspondence files held by APRA relating to the Applicant (or entitled “The Applicant – Correspondence” or similar description) for the calendar years 2000, 2001, 2002 and 2003.
(4) All documents made available to Mr. Byres for the purpose of his making the decision, of 20 & 22 January 2003, to vary the conditions of the Applicant’s approval. (The “Cap Decision”)
(5) All documents prepared by Mr Byres in connection with the making of the Cap Decision and any documents referring to the expected, intended or likely effect of the Cap Decision on the Applicant (whether created by Mr. Byres or any other employee of APRA)
(6) The legal advice held by APRA relating to subsection 26(1)(b)(i) of the SIS Act apparently dated 16 January 2003.
(7) All documents evidencing the decision made, or referring to, the reasons for the decision made to conduct the “investigation” as referred to in the Notice of Investigation issued by APRA, addressed to the Applicant, dated 20 August 2003. (The “Investigation”); including, without limiting, the generality thereof:
(a) all internal memoranda which refer to the expected, likely or intended effect of the Investigation on The Applicant; and
(b)all submissions provided to Mr Darryl Roberts, General Manager Enforcement, by other officers at APRA.
(8) All documents evidencing instructions provided to Mr Anthony McGrath, or his delegates and employees, by APRA, as to the matters to investigate, during the Investigation.”
5. The Respondent in answer to the Summons wrote to the Applicant’s solicitors; that letter dated 23rd January 2004 (“the January 2004 letter”) reads as follows:
“We refer to the Summons to Produce served on APRA. We respond as follows:
(a) We consider categories (1), (2) and (3) to be too wide. Would you please particularise what documents you require from the files in each category and explain the relevance of those documents to the AAT proceedings. We note that all the files relied upon by the delegate who decided to revoke your client’s approval as trustee were produced to you through the Federal Court proceedings. Your client has always maintained that the issues relating to this and the decision to vary its IOA to prevent it assuming trusteeship of further funds, are the same. Therefore, we are unsure why any further documents are relevant to this matter;
(b) All documents in categories (4) and (5) have been produced to you in the T‑documents;
(c) APRA has previously claimed legal professional privilege over document (6) and continues to do so. Further we fail to see the relevance of this document to the issues at hand;
(d) We do not consider the documents in categories (7) and (8) to be relevant to these proceedings. We refer to the letter from Tom Galloway to you dated 8 July 2003 as to the concerns APRA had with your client prior to the investigation taking place.
We will therefore be objecting to produce documents in accordance with the summons to produce for the reasons stated above. We will fax a copy of this letter to the AAT for the purposes of the return date on 29 January 2004.”
6. A hearing took place before the Tribunal on 13 February 2004 for the purpose of directions as to the Summons. Mr R W White S C of Counsel instructed by Turks Legal appeared for the Applicant and Mr L T Grey of Counsel instructed by Ms N Jayasinghe of the Respondent, appeared for the Respondent.
7. Mr White pressed only for delivery of the documents referred to in paragraphs (1), (2), (3), (7) and (8) of the Summons. He accepted that the documents referred to in paragraphs (4) and (5) have been produced and that legal professional privilege may apply in respect of the documents referred to in paragraph (6). The documents called for fall into two categories; those encompassed by paragraphs (1), (2) and (3) comprise one category ("the First Category”) and those encompassed by paragraphs (7) and (8) (because of their link to an investigation pursuant to section 263 of the SIS Act) fall into another category (“the Second Category”).
8. As appears from the Stay Decision, an independent investigator has been appointed (pursuant to section 263 of the SIS Act) in order to conduct an investigation into the affairs of the superannuation entities of which the Applicant is the trustee. That investigation is ongoing. As indicated in clause (6) of the Stay Decision, the Tribunal is charged only with the review of the relevant decision and nothing else.
9. I consider that clause 13 of the Stay Decision can usefully be repeated in this decision, on the basis that it remains relevant and applicable. Clause 13 of the Stay Decision reads as follows:
“13. I should make it altogether clear that the evidence before me is far from complete. There are witnesses whose evidence is still to be heard leaving aside the fact that Smythe’s cross-examination is not complete and in addition his re‑examination remains to be heard. There may well be further exhibits. And of course it goes without saying that to consider the exhibits to date and in particular the Agreed Bundle with any care will take weeks and perhaps more. It follows then that all comments on the evidence contained in this part B must be treated as if prefaced by a cautionary note to the effect that the comment is necessarily subject to a consideration of all of the evidence as a whole. That, as I have indicated is something which of necessity can occur only at some time in the future.”
Indeed and at this hearing, Mr White tendered an additional exhibit (which will so he said, be tendered at the hearing when it resumes) and being the minutes of a meeting at the offices of the Applicant which took place on 9th October 2001. That exhibit is at this stage referred to as (“the Directions Exhibit”).
10. It would appear that in respect of the First Category, there are 29 and perhaps more files which fit the description. The Respondent in the January 2004 letter (quoted earlier in these reasons) took issue with the Applicant as to the relevance of the information sought. The Respondent moreover asked the Applicant to particularise the documents required from the files, in each category, and asked the Applicant to explain the relevance of those documents in relation to the relevant decision. The Respondent contended also that those files which were relied upon in order to revoke the Applicant’s authority were produced at certain proceedings before the Federal Court in 2003. The Applicant in turn contends (and in my view fairly enough) that it does not know what the files contain and for this reason cannot specify what, in relation to each file is relevant. (It appears to be accepted that there may perhaps be some degree of overlap between the files in question and the documents furnished in the Federal Court proceedings in the sense that some of the latter documents form part of or may have been taken from the files in question).
11. In Lego Australia Pty Ltd and Ors v Paraggio and Ors 52 FCR page 542, Hill J delivered the Judgment of the Full Federal Court (Beaumont, Hill and Whitlam JJ); Hill J said at page 567:
“(F) In many cases which fall for decision by this court the decision-maker is the head of a government authority or a delegate of that person and the decision sought to be challenged is made by reference to information which has been placed before the decision-maker taken from the files of the authority. In such a case the court will have regard to all the material held by the authority in its files, not merely to the material actually placed before the decision-maker to determine, for example, whether the decision was an improper exercise of power (s 5(1)(e)) or as being so unreasonable that no reasonable person could have arrived at it (s 5(2)(g). .”
12. Mr White also cited (at some length) the (unreported) judgment of Hill J in Canwest Global Communications Corp and Ors v Australian Broadcasting Authority and Anor [1997] 540 FCA (16 June 1997). At page 8, and in the third full paragraph Hill J said:
“Each of the applicants now seek discovery of all documents before the relevant decision-maker (the Authority or the Treasurer as the case may be) at the time the decisions were made. To this request the respondents reply, in the Authority matter, that they have supplied all documents which the Authority took into account when making the decision. No documents at all have been supplied in the proceedings to which the Treasurer is a party. The respondents rely upon an affidavit of a Mr Corker who is the principal legal officer of the Authority. He refers to various documents and then deposes that, to the best of his knowledge, information and belief, there are no other documents in the possession of the Authority directly relevant to the issues between the parties to these proceedings. Perhaps, ironically, two paragraphs later he somewhat weakens the strength of that testimony by referring to some documents which had come to notice which had not been in an original confidential exhibit which he had said to be complete. Be that as it may, there is an arrogance, which is somewhat breathtaking, that a public servant should seek to substitute his opinion as to what is relevant to the issues between the parties for the opinion of the Court.”
And at pages 11 and 12 Hill J said:
“However, one of the grounds of review (once amendment to the grounds is made as has been requested and which amendment I would allow) is that the Authority’s decision was unreasonable and incapable of being supported by any material which was before the Authority. The ground as formulated is in essence a ground of Wednesbury unreasonableness: cf Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223. I do not pause here to consider the difficult question of the role which Wednesbury unreasonableness plays, having regard to the statutory grounds of review in the ADJR Act. On the one hand there is a clear tension between an unreasonableness ground and the principle that the courts should not intrude into the merits of administrative decisions: Minister of Immigration and Ethnic Affairs v Wu Shan Liang (1966) 185 CLR 259. So, the ground of Wednesbury unreasonableness may, of necessity, need to be confined. Nevertheless, there have been a number of cases, both in the High Court and in this Court, where a review of administrative decisions has been undertaken on the grounds of unreasonableness; cf Luu v Renvier (1989) 91 ALR 39, Fares Rural Meat and Live-stock Co Pty Ltd v Australian Meat and Livestock Corporation (1990) 96 ALR 153 and the cases there cited, including Chan Yee Kin v Minister for Immigration and Ethnic Affairs (1989) 169 CLR 379 and see Tickner v Bropho (1993) 40 FCR 183.
Where the issue is whether a decision reached by an administrative decision-maker is so unreasonable or irrational that no reasonable (or rational) decision-maker could possibly arrive at it, regard must be had to the material which was actually before the decision-maker. I use the word “actually” without intending to exclude from consideration material which was constructively before the decision-maker in that it was held by the decision-maker or the government department, although not in fact taken into account: cf Minister for Aboriginal Affairs v Peko Wallsend Ltd (1985-6) 162 CLR 24 at 45 and Lego Australia Pty Ltd v Paraggio (1994) 52 FCR 542 at 567.
Since the ground can only be made out by having regard to the totality of the evidence before the decision-maker, in the sense which I have used that expression, it must follow axiomatically that the material before the decision-maker must be available to the Court. If the material is not put before the Court, the applicant might demonstrate unreasonableness by reference to such material as is before the Court but be met by an argument that, since there was other material “before” the decision-maker, the applicant has not made good his case since the material not before the court might demonstrate reasonableness.
It is, as I have already suggested, not satisfactory for a public servant to say that in his view there is no relevant material other than that which he has selected from the material which was before the decision-maker. He may very well be right, but at the end of the day his process of selection is irrelevant. Accordingly, it must follow that it is necessary for the administration of justice and for the disposing fairly of a Wednesbury ground of review, that all material before the decision-maker be before the Court. I note an argument that in some cases a Wednesbury argument is sought to be made in respect of particular findings which may be findings of fact on the way to the decision: cf Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 359-360. However, the point still holds good, to the extent that the Court has jurisdiction (a matter yet to be decided), that the material before the decision-maker must be available to the Court to enable the Court to decide the matter.”
13. It will be noted that Hill J referred in Canwest, to the judgment of the High Court in Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24 and where, at page 45, Mason J said:
“It would be a strange result indeed to hold that the Minister is entitled to ignore material of which he has actual or constructive knowledge and which may have a direct bearing on the justice of making the land grant, and to proceed instead on the basis of material that may be incomplete, inaccurate or misleading. In one sense this conclusion may be seen as an application of the general principle that an administrative decision-maker is required to make his decision on the basis of material available to him at the time the decision is made. But that principle is itself a reflection of the fact that there may be found in the subject-matter, scope and purpose of nearly every statute conferring power to make an administrative decision an implication that the decision is to be made on the basis of the most current material available to the decision-maker.”
14. The cases to which I have referred deal with judicial review of decisions, and in respect of which questions of unreasonableness on the part of the decision-maker, whether or not within the Wednesbury test, were thus considered (“Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223”). However, and in this matter, the Tribunal is charged with the task of formulating the correct and preferable decision; put in other words, the Tribunal has power to alter the decision by the relevant decision-maker whether or not it was unreasonable. If it is necessary for the purposes of judicial review, for a judge to have before him all material before the decision-maker, then a fortiori, it is necessary for the Tribunal to do so. In this case the Respondent has selected from the material in his possession. As Hill J said in Canwest, the selection may perhaps have been right, but the decision-maker’s “process of selection is irrelevant.”
15. Mr Grey criticised the issue of the Summons on the basis that it occurred only after the hearings had commenced. Mr White pointed out that the original hearing was scheduled for three days and being a period midway between periods selected by the parties. That period proved to be grossly inadequate. While it might have been preferable to have issued the Summons before the hearings commenced, the issue of the Summons at a later time cannot be either fatal or indeed material.
16. It is clear enough that the relevant decision relates to the conduct of the Applicant over a lengthy period, and in respect of which an audit procedure took place. The effect of the relevant decision is to cast doubt on the ability of the Applicant to perform its function. The evidence as I have noted is large; however, Mr White contended that some at least of the Respondent’s concerns appear not to have been well-founded. As one example a lengthy letter by the Respondent dated 8 July 2003 includes a complaint that Mr Benjamin Smythe did not disclose in writing his former association with Commercial Nominees Australia Limited. Mr White pointed out that page 719A in volume 2 of the Agreed Bundle contains a file note dated 9 October 2001 by the Respondent which indicates that it knew of his association with Commercial Nominees Australia Pty Ltd at that date. The Decisions Exhibit suggests that the Applicant might perhaps be able to make a similar criticism concerning the Respondent’s state of knowledge in respect of the degree of involvement of Mr Hall in the affairs of the Applicant at relevant times.
17. It is clear enough that the Respondent alleges inter alia, lack of candour on the part of the Applicant. It must follow that what the Respondent knew is relevant; this is so also in relation to what the Respondent regarded as relevant for the purposes of making the relevant decision.
18. The relevant decision was made in accordance with section 27C of the SIS Act. The SIS Act is one of the Acts referred to in section 56 of the Australian Prudential Regulation Authority Act 1998 (“the APRA Act”). The following provisions of section 56 are set out in this clause:
Section 56(1) contains the definitions of inter alia “court”, “protected document”, and “protected information” as follows:
“"court" includes a tribunal, authority or person having the power to require the production of documents or the answering of questions.
…
“protected document" means a document given or produced (whether before or after the commencement of this section) under, or for the purposes of, this Act or an Act covered by this section and containing information relating to the affairs of:
(a) a body regulated by APRA; or
(b) a body corporate (including a body corporate that has ceased to exist) that has at any time been, or is, related (within the meaning of the Corporations Act 2001) to a body regulated by APRA; or
(c) a person who has been, is, or proposes to be, a customer of a body regulated by APRA; or
(ca) a registered entity; or
(cb) a body corporate (including a body corporate that has ceased to exist) that has at any time been, or is, related (within the meaning of the Corporations Act 2001) to a registered entity; or
(cc) a person who has been, is, or proposes to be, a customer of a registered entity;
other than:
(d) a document containing information that has already been lawfully made available to the public from other sources; or
(e) a document given or produced under, or for the purposes of, a provision of the Superannuation Industry (Supervision) Act 1993 :
(i) administered by the Commissioner of Taxation; or
(ii) being applied for the purposes of the administration of a provision administered by the Commissioner of Taxation.
"protected information" means information disclosed or obtained (whether before or after the commencement of this section) under, or for the purposes of, this Act or an Act covered by this section and relating to the affairs of:
(a) a body regulated by APRA; or
(b) a body corporate (including a body corporate that has ceased to exist) that has at any time been, or is, related (within the meaning of the Corporations Act 2001) to a body regulated by APRA; or
(c) a person who has been, is, or proposes to be, a customer of a body regulated by APRA; or
(ca) a registered entity; or
(cb) a body corporate (including a body corporate that has ceased to exist) that has at any time been, or is, related (within the meaning of the Corporations Act 2001) to a registered entity; or
(cc) a person who has been, is, or proposes to be, a customer of a registered entity;
other than :
(d) information that has already been lawfully made available to the public from other sources; or
(e) information given or produced under, or for the purposes of, a provision of the Superannuation Industry (Supervision) Act 1993 :
(i) administered by the Commissioner of Taxation; or
(ii) being applied for the purposes of the administration of a provision administered by the Commissioner of Taxation.”
Sections 56(2), 56(3), 56(4) and 56(8) of the APRA Act read respectively as follows:
“(2) A person who is or has been an officer is guilty of an offence if:
(a) the person directly or indirectly:
(i) discloses information acquired in the course of his or her duties as an officer to any person or to a court; or
(ii) produces a document to any person or to a court; and
(b) the information is protected information, or the document is a protected document; and
(c) the disclosure or production is not in accordance with subsection (3), (4), (5), (5A), (5B), (5C), (6), (7), (7A), (7B) or (7C).
Penalty: Imprisonment for 2 years.
Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.
(3) It is not an offence if the disclosure of protected information or the production of a protected document by a person is for the purposes of this Act or an Act covered by this section.
(4) It is not an offence if the disclosure of protected information or the production of a protected document by a person:
(a) is by an employee of the person to whose affairs the information or document relates; or
(b) occurs after the person to whose affairs the information or document relates has agreed in writing to the disclosure or production.
…
(8) A person who is, or has been, an officer cannot be required to disclose to a court any protected information, or to produce in a court a protected document, except when it is necessary to do so for the purposes of this Act or an Act covered by this section.”
19. Notwithstanding that in the January 2004 letter, the Respondent did not cite the APRA Act, Mr Grey contended that the Respondent is entitled to refuse to supply the documents requested because they are protected documents or protected information, disclosure of which is prohibited by section 56(2) of the APRA Act. He contended in particular in relation to section 56(8) that that exception cannot apply until the question of whether the information is necessary has first been determined and that determination must (if I understood him correctly) be made by the Respondent.
20. Having regard to submissions by Mr White and to the express words of Hill J in Canwest (and in particular in the last paragraph quoted in these reasons) “necessary” can only mean that it is necessary for the administration of justice and should in all probability be construed as “reasonably necessary”; that is not a matter which can or indeed should be determined by one of the parties acting unilaterally. Accordingly and in relation to section 56(8) of the APRA Act, it is my view that delivery is not prohibited by the terms of that section.
21. But even apart from section 56(8) of the APRA Act (and also section 56(4) (b) of the APRA Act referred to later in these reasons) section 56(3) permits the disclosure. This is because it is required for the purposes of an Act covered by the section and being in this case the SIS Act; the relevant decision was made under section 27C of the SIS Act.
22. In any event disclosure is permitted having regard to section 56(4)(b) of the APRA Act; the Summons must in my view (albeit inferentially) be regarded as the consent required by that subsection even if it does not refer to it in specific terms. Mr Grey contended that the person whose consent is required is not the trustee (the Applicant) and is rather the “person to whose affairs the information or document relates” and being each relevant superannuation fund or perhaps its beneficiaries. The APRA Act is not clear in this particular context; however as a matter of trust law, the trustee owns the relevant assets as the legal owner and it would, in my view be the trustee’s consent which is required. (The wording of the subsection is such that in my view Mr Grey’s submissions in this context are not altogether unarguable; even if I am wrong as to the correct meaning to be attributed to section 56(4)(b) of the APRA Act, section 56(3) of the APRA Act permits disclosure)
23. The three paragraphs of the First Category are cast in wide terms but in my view understandably so. The periods referred to in paragraphs (1) and (3) are those which are relevant in relation to the relevant decision, and in relation to paragraph (2) the request is relevant having regard inter alia, to the stress placed on the “round robin” structure which was put in place at that time, and which is referred to in the Stay Decision.
24. The Second Category is in my view more difficult. Although the Tribunal has no knowledge of the investigation or its progress, it seems likely that the decision to appoint an investigator arose in consequence of what had occurred previously. But as I have indicated, my decision must be made in relation to the relevant decision and nothing else. (I note also that a large proportion of the documents sought in the Second Category would be included in paragraph (3) of the Summons
25. Put in summary form, the cases cited indicate that it is unlikely to be proper for a decision-maker to refuse disclosure of documentation which is or may be relevant on the basis that the decision-maker has already made an appropriate selection; (the decision-maker may of course be able to refuse delivery on other grounds but this is an aspect which is not relevant for the purposes of this decision). This being so the Applicant is entitled to the relief sought in respect of the First Category. In respect of the Second Category and whether or not an application could or should or might have been made at this time or any other time, on public policy grounds, I do not think it proper to order disclosure of documentation related to an ongoing investigation by an independent investigator, appointed for the express purpose of conducting it, and which falls outside the relevant decision.
26. Accordingly the Tribunal directs the Respondent to comply with paragraphs (1), (2) and (3) but not paragraphs (7) and (8) of the Summons.
I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of Mr J Block, Deputy President
Signed: Guy Moloney
AssociateDate/s of Hearing 13 February 2004
Date of Decision 23 February 2004
Counsel for the Applicant Mr R W White S C
Solicitor for the Applicant Turks Legal
Counsel for the Respondent Mr L T Grey
Solicitor for the Respondent Ms N Jayasinghe
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