Australian Prudential Regulation Authority v Tidswell Administration Limited

[2003] FCA 1446

FEDERAL COURT OF AUSTRALIA

Australian Prudential Regulation Authority v Tidswell Administration Limited [2003] FCA 1446

Superannuation Industry (Supervision) Act 1993 (Cth) – conditions of approved trustee – variation by Australian Prudential Regulation Authority – review by Administrative Appeals Tribunal – effect of subsequent variation upon jurisdiction of Administrative Appeals Tribunal – whether continued application for review vexatious

Administrative Appeals Tribunal Act 1975 (Cth) ss 26, 42B, 43, 44
Superannuation Industry (Supervision) Act 1993 (Cth) ss 26, 27C, 27E, 344

D Pearce, Commonwealth Administrative Law, Butterworths, Sydney, 1986

AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY v TIDSWELL ADMINISTRATION LIMITED
S 400 of 2003

SELWAY J
12 DECEMBER 2003
ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	S 400 OF 2003

BETWEEN:	AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY APPLICANT
AND:	TIDSWELL ADMINISTRATION LIMITED RESPONDENT
JUDGE:	SELWAY J
DATE OF ORDER:	12 DECEMBER 2003
WHERE MADE:	ADELAIDE

THE COURT ORDERS THAT:

1.The decision of the Administrative Appeals Tribunal given on 13 February 2003 that the Administrative Appeals Tribunal has jurisdiction to review the decision of the applicant dated 1 February 2002 is affirmed.

2.The decision of the Administrative Appeals Tribunal given on 13 February 2003 declining to dismiss the application pursuant to s 42B of the Administrative Appeals Tribunal Act 1975 (Cth) be set aside.

3.The matter be remitted to the Administrative Appeals Tribunal for its further consideration.

4.        No order as to costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	S 400 OF 2003

BETWEEN:	AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY APPLICANT
AND:	TIDSWELL ADMINISTRATION LIMITED RESPONDENT

JUDGE:	SELWAY J
DATE:	12 DECEMBER 2003
PLACE:	ADELAIDE

REASONS FOR JUDGMENT

1. The applicant seeks a review of the decision of the Administrative Appeals Tribunal (‘the Tribunal’) given on 13 February 2003. Such a review (described in the Act as an ‘appeal’) is limited to questions of law: s 44 Administrative Appeals Tribunal Act 1975 (Cth) (‘AAT Act’). The applicant raises two grounds of appeal. First, it says that the Tribunal made an error of law in holding that it had jurisdiction to hear the application made by the respondent. Second, it says that the Tribunal made an error of law in its analysis of whether the application is frivolous or vexatious within the meaning of s 42B of the AAT Act. For the reasons given below, the applicant succeeds on the second ground.

2. The respondent did not wish to be heard on the appeal, although it did not consent to any specific orders.  Consequently, it was necessary for the applicant to satisfy the Court of the merit of its appeal.  In doing so the Court did not have the benefit of full argument on the issues.

3. The respondent is (and was at all relevant times) an approved trustee for the purposes of the Superannuation Industry (Supervision) Act 1993 (Cth) (‘SIS Act’). That approval was subject to conditions pursuant to s 26(3) of the SIS Act. For reasons that need not concern me, on 1 February 2002, those conditions were varied by a delegate of the Australian Prudential Regulation Authority (‘APRA’) acting pursuant to s 27C of the SIS Act. That section provides:

   ‘APRA may, on its own initiative, vary the approval of a trustee by varying:

   (a)any written custody requirements with which the trustee is required to comply; or

   (b)     any conditions to which the approval is subject.’

   The new conditions were effective from 11 February 2002.

4. The respondent sought a review of the decision of the delegate pursuant to s 344 of the SIS Act. That section provides:

   ‘Request for review

   (1)A person who is affected by a reviewable decision of the Regulator may, if dissatisfied with the decision, request the Regulator to reconsider the decision.

   How request must be made

   (2)The request must be made by written notice given to the Regulator within the period of 21 days after the day on which the person first receives notice of the decision, or within such further period as the Regulator allows.

   Request must set out reasons

   (3)The request must set out the reasons for making the request.

   Regulator to reconsider decision

   (4)Upon receipt of the request, the Regulator must reconsider the decision and may, subject to subsection (5), confirm or revoke the decision or vary the decision in such manner as the Regulator thinks fit.

   Deemed confirmation of decision if delay

   (5)If the Regulator does not confirm, revoke or vary a decision before the end of the period of 60 days after the day on which the Regulator received the request under subsection (1) to reconsider the decision, the Regulator is taken, at the end of that period, to have confirmed the decision under subsection (4).

   Notice of Regulator’s action

   (6)If the Regulator confirms, revokes or varies a decision before the end of the period referred to in subsection (5), the Regulator must give written notice to the person telling the person:

   (a)     the result of the reconsideration of the decision; and

   (b)the reasons for confirming, varying or revoking the decision, as the case may be.

   Notice to Commissioner of Taxation

   (7)If the Regulator gives a notice to a person under subsection (6) telling the person that a decision under section 40 has been revoked or varied, the Regulator must give to the Commissioner of Taxation particulars of the notice.

   AAT review of Regulator’s decisions

   (8)Applications may be made to the Administrative Appeals Tribunal for review of decisions of the Regulator that have been confirmed or varied under subsection (4).

   Period for making certain AAT applications

   (9)If a decision is taken to be confirmed because of subsection (5), section 29 of the Administrative Appeals Tribunal Act 1975 applies as if the prescribed time for making application for review of the decision were the period of 28 days beginning on the day on which the decision is taken to be confirmed.

   Section 41 of AAT Act

   (10)If a request is made under subsection (1) in respect of a reviewable decision, section 41 of the Administrative Appeals Tribunal Act 1975 applies as if the making of the request were the making of an application to the Administrative Appeals Tribunal for a review of that decision.

   Hearings in private

   (11)The hearing of a proceeding relating to a reviewable decision is to take place in private and the Administrative Appeals Tribunal may, by order:

   (a)give directions as to the persons who may be present; and

   (b)give directions of a kind referred to in paragraph 35(2)(b) or (c) of the Administrative Appeals Tribunal Act 1975.

   Only trustees affected by certain reviewable decisions

   (12)For the purposes of this section and section 345, a person is taken not to be affected by a reviewable decision (other than a reviewable decision covered by paragraph (ba), (c), (d), (pa), (pb), (q), (r), (ra), (rb), (s) or (t) of the definition of reviewable decision in section 10) unless the person is the trustee of a superannuation entity that is affected by the decision.’

5. On 26 April 2002, a delegate of the respondent confirmed the previous decision made by a different delegate on 1 February 2002.

6. On 23 May 2002, the respondent lodged with the Tribunal an application made pursuant to s 344(8) of the SIS Act to review the determination of the delegate made on 26 April 2002.

7. Before the Tribunal could consider the application for review, the respondent, again acting pursuant to s 27C of the SIS Act, made a further variation of the conditions of the respondent’s approval on 14 June 2002. That further variation came into effect on 1 July 2002 (see s 27E of the SIS Act).

8. When the Tribunal came to consider the application for review the applicant argued that the decision of 26 April 2002 had effectively been overtaken by the further variation of conditions that was effected on 14 June 2002.  The applicant argued that the Tribunal no longer had jurisdiction to hear the application.  In the alternative, the applicant argued that the application was frivolous and vexatious.

9. The Tribunal held that it did have jurisdiction:

   ‘There is no dispute between the parties that the application to review the decision of 1 February 2002 was properly made at the time that it was lodged. It had been reviewed and confirmed by the respondent by its later decision dated 26 April 2002. Section 27C of the SIS Act gave the respondent the power to vary the second IoA [Instrument of Approval] on its own initiative and so to issue the third IoA but, on its face, it did not go any further. It did not, for example, give the respondent the power to review its decision to issue the second IoA or, in the words of the respondent, to “supersede” the earlier decision with a later decision. The word “supersede” suggests that the earlier decision was set aside and that is certainly not the case. The decision of 1 February 2002 and the second IoA issued as a result both continued to remain in force despite the subsequent decision of 14 June 2002 to issue the third IoA. The second IoA remained in force from 11 February to 30 June 2002 when the third IoA came into operation. …

   In view of the provisions of section 29, the IoA in effect for a period can never be of purely historical interest as suggested by the respondent. If it should become apparent that the applicant was in contravention of a condition of the second IoA in the period from 11 February 2002 to 30 June 2002 and if, without reasonable excuse, the applicant had not given notice as specified in section 29, it would have committed an offence. Any contravention might have become apparent during the period or since the second IoA was replaced by the third IoA. A review of the conditions specified in the IoA could lead to a variation of those conditions and so would affect whether or not the applicant has been in contravention of a condition and so whether or not it has committed an offence of strict liability. …’

10. In my view the Tribunal’s analysis of its jurisdiction is correct. As it pointed out, the conditions as varied on 2 February 2002 remained operable and in effect from 11 February 2002 to 30 June 2002. If, during that time, there had been any breach of those conditions, this may have affected the respondent’s legal liabilities and may have subjected it to various penalties. If the Tribunal had determined that those conditions should be varied then such a decision may have had a retrospective effect: see s 43(6) of the AAT Act. (I note the significant problems with the interpretation and application of that subsection, particularly where the original decision was not invalid ab initio and where third party interests might be affected: see D Pearce, Commonwealth Administrative Law, Butterworths, Sydney, 1986 p 84.  In the circumstances of this case it is unnecessary to explore those problems).  It is clear enough that the later decision of the applicant in June did not ‘supersede’ the previous February decision – they were separate decisions having different temporal operation.  The Tribunal retained jurisdiction to hear the application before it.

11. The applicant also argued that the application before the Tribunal should have been dismissed as being vexatious and frivolous. Section 42B of the AAT Act provides:

    ‘(1)Where an application is made to the Tribunal for the review of a decision, the Tribunal may, at any stage of the proceeding, if it is satisfied that the application is frivolous or vexatious:

    (a)     dismiss the application; and

    (b)if the Tribunal considers it appropriate, on the application of a party to the proceedings, direct that the person who made the application must not, without leave of the Tribunal, make a subsequent application to the Tribunal of a kind or kinds specified in the direction.

    (2)A direction given by the Tribunal under paragraph (1)(b) has effect despite any other provision of this Act or a provision of any other Act.

    (3)     The Tribunal may discharge or vary such a direction.’

12. The applicant argued before the Tribunal that, as the February conditions were no longer applicable, the continued pursuit of the proceedings was ‘frivolous or vexatious’. In responding to that submission the Tribunal may have reached the conclusion that the June decision was ineffective by virtue of s 26 of the AAT Act, so that the February decision continued in operation notwithstanding the later June decision:

    ‘Once the applicant had, as it has, lodged its application for review of the decision to issue the second IoA in accordance with section 344 of the SIS Act, that decision could not be altered except in very limited circumstances. This is the effect of section 26 of the AAT Act, which provides that:

    (1)Subject to section 42D, after an application is made to the Tribunal for a review of a decision, the decision may not be altered otherwise than by the Tribunal on review unless:

    (a)the enactment that authorised the making of the application expressly permits the decision to be altered; or

    (b)the parties to the proceeding, and the Tribunal, consent to the making of the alteration.

    (2)A reference in subsection (1) to the alteration of a decision is a reference to:

    (a)     the variation of a decision; or

    (b)     the setting aside of a decision; or

    (c)the setting aside of a decision and the making of a decision in substitution for the decision set aside.

    …section 27C does not permit the decision of 1 February 2002 to be altered. There is no other section in the SIS Act that permits the decision to be altered. The applicant has certainly not consented to the making of any alteration to the decision and, as observed above, the decision of 1 February 2002 has not been altered.’

13. There are certainly other aspects of the Tribunal’s reasons, some of which have already been quoted above, which would suggest that the Tribunal accepted that the decision made in June was effective to vary the conditions.  Nevertheless, the conclusion reached by the Tribunal seems to assume that the respondent is presently still subject to the February conditions:

    ‘Therefore, the applicant continues to be a person who is affected by the decision of the respondent dated 1 February 2002.  Its application is not frivolous.’

14. This conclusion could, of course, be one of fact. For example, there might be some risk that the respondent breached the then applicable conditions in the period from 11 February 2002 - 30 June 2002 and, to that extent, remains subject to the potential liabilities arising from that. However, there would not appear to have been any suggestion before the Tribunal of any such risk. The applicant informed me that there was no such risk. There is no discussion by the Tribunal of any such risk. The other alternative is that the Tribunal reached the legal conclusion that the conditions made in February, 2002 could not be varied under s 27C of the AAT Act until the Tribunal had determined the application for review.

15. Whichever of these approaches the Tribunal has adopted would seem to me to involve an error of law. Alternatively, if the Tribunal concluded that the conditions could not be varied then in my view it was wrong in law. In my view the SIS Act clearly distinguished between a new decision made under s 27C and the review of decisions previously made under that section. Indeed, given the nature and potential importance of the regulatory functions of the applicant, it would be a very significant weakness in the legislative scheme if the applicant were unable to act expeditiously under s 27C of the SIS Act because some previous decision under that section was the subject of review. If the Tribunal treated the issue as one of fact then there was an error of law by the Tribunal in failing to identify what facts were relevant to that factual inquiry. Indeed, in the absence of any analysis by the Tribunal of any relevant facts then the Tribunal seems to have confused the facts relevant to the question of its jurisdiction with the facts relevant to the question whether the proceedings were frivolous or vexatious.

16. In my view there was an error of law by the Tribunal in the manner in which it dealt with the submission that the proceedings were frivolous and vexatious and that the proceedings should be dismissed under s 42B of the AAT Act. Notwithstanding that there was an error of law, the question whether or not the application was and is frivolous or vexatious is a matter for the Tribunal, not for me. This is particularly so when I have not heard from the respondent. The appropriate orders to be made in these proceedings are orders setting aside the decision of the Tribunal declining to dismiss the application pursuant to s 42B of the AAT Act and remitting the matter to the Tribunal for its further consideration. I make no order as to costs.

I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Selway.

Associate:

Dated:             12 December 2003

Counsel for the Applicant:	P Slattery
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Respondent:	The Respondent did not appear
Solicitor for the Respondent:	Thomson Playford
Date of Hearing:	11 November 2003
Date of Judgment:	12 December 2003