Australian Securities and Investments Commission v Saxby Bridge Financial Planning Pty Ltd

[2003] FCA 763

FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission v Saxby Bridge Financial Planning Pty Ltd & Ors [2003] FCA 763

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v SAXBY BRIDGE FINANCIAL PLANNING PTY LTD (ACN 073 888 979), ABS SECURITIES PTY LTD (ACN 081 560 349) & JEFFREY JOSEPH BRAYSICH

N756 OF 2003

BENNETT J
23 JULY 2003
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N756 OF 2003

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY A DEPUTY PRESIDENT

BETWEEN:

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
APPLICANT

AND:

SAXBY BRIDGE FINANCIAL PLANNING PTY LTD
(ACN 073 888 979)
FIRST RESPONDENT

ABS SECURITIES PTY LTD
(ACN 081 560 349)
SECOND RESPONDENT

JEFFREY JOSEPH BRAYSICH
THIRD RESPONDENT

JUDGE:

BENNETT J

DATE OF ORDER:

23 JULY 2003

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1The notice of motion be dismissed.

2The costs of the motion be costs in the cause.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N756 OF 2003

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY A DEPUTY PRESIDENT

BETWEEN:

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
APPLICANT

AND:

SAXBY BRIDGE FINANCIAL PLANNING PTY LTD
(ACN 073 888 979)
FIRST RESPONDENT

ABS SECURITIES PTY LTD
(ACN 081 560 349)
SECOND RESPONDENT

JEFFREY JOSEPH BRAYSICH
THIRD RESPONDENT

JUDGE:	BENNETT J
DATE:	23 JULY 2003
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This is an appeal from a decision of a Deputy President of the Administrative Appeals Tribunal (‘the Tribunal’) pursuant to s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (‘the AAT Act’). By notice of motion filed with the notice of appeal, the applicant (‘ASIC’) seeks orders that the decision of the Tribunal be stayed pending the outcome of the appeal and expedition of the hearing.

2. The matter came before me for directions at which time the notice of motion was heard with respect to the application for a stay. There had not been a determination in accordance with s 44(3) of the AAT Act but, by reason of s 44A of the AAT Act and Order 53 Rule 9, I have jurisdiction to hear the application.

3. I note that s 44A(1) of the AAT Act provides that the institution of an appeal to this Court does not affect the operation of the decision or prevent the taking of action to implement the decision. By s 44A(2), the relevant considerations in making an order for a stay are those ‘appropriate for the purpose of securing the effectiveness of the hearing and determination of the appeal’.

   BACKGROUND

4. In July 2001, an ASIC hearing pursuant to s 837 of The Corporations Law commenced as to whether the securities dealers licences of the first and second respondents should be revoked pursuant to s 826 of The Corporations Law and as to whether a banning order should be made against the third respondent pursuant to s 829 of The Corporations Law. Following that hearing, on 30 October 2001, ASIC revoked the securities dealers licences and made an order in respect of the third respondent banning him from acting as a representative of a dealer for five years. The respondents sought review of those decisions pursuant to s 1317B of the Corporations Act 2001 (Cth) (‘the Corporations Act’). On 28 May 2003, the Tribunal made orders setting aside the decisions under review.

5. The decision appealed from is in the following terms:

   ‘The Tribunal sets aside the decision under review and remits the matter to the Respondent with directions, first, that the securities dealers licences of Saxby Bridge Financial Planning and ABS Securities be reinstated subject to appropriate conditions, pursuant to s 786(1) of the Corporations Act 2001, with a view to achieving more effective compliance with s 849(2) of the Act; and, second, that the banning order on Jeffrey Braysich should not have been imposed.”

6. The controversy between the parties involves questions as to whether the first and second respondents have contravened securities laws (notably s 849(2) and s 851 of The Corporations Law) and whether any of the respondents have failed to perform their statutory duties ‘efficiently, honestly and fairly’. Where such contraventions or failures have occurred, ASIC has the power under s 826 of The Corporations Law to revoke a securities dealers licence and the power under s 829 to make a banning order in respect of a representative of a dealer.

7. Under the heading ‘question of law’, the notice of appeal raises a number of issues, such as:

   ‘1.Whether the Tribunal adopted a correct approach to s 826(1) of the Corporations Law.

   2.Whether the Tribunal adopted a correct approach to s 851 of the Corporations Law.

   3.Whether the Tribunal adopted a correct approach to s 849 of the Corporations Law.’

8. Under the same heading, the notice of appeal raises questions of fact. Some of the ‘questions of law’ are framed in terms of ‘failed to take into account’ or ‘bound to consider’ questions of fact and whether the respondents had performed or would perform their duties ‘efficiently, honestly and fairly’ within the meaning of s 826(1) and s 829 of The Corporations Law.

9. The application for a stay was on two bases. The first was that, if there were no stay but the appeal were successful, the first and second respondents would have the benefit of s 1433 of the Corporations Act and the transitional provisions with respect to a ‘regulated principal’ to which they were not entitled. It was submitted that such benefit, once exercised, could not be revoked. The benefit is available until 11 March 2004 so that, if the appeal is determined expeditiously and dismissed, the first and second respondents will still be able to have the benefit of the transitional provisions and apply for an Australian Financial Services Licence utilising the streamlined application process. After some discussion, the respondents offered an undertaking not to make any application under the transitional provisions until the determination of the appeal, or until further order, if the appeal can be set down for hearing in August. If the undertaking is given, ASIC withdraws its application for a stay on this basis.

10. The Chief Justice has now determined that the matter is to be heard by a Full Court. Dates in August are to be allocated. Accordingly, I accept the undertaking of the respondents by their counsel in the above terms.

11. The second basis on which the application for a stay is pressed concerns the findings of the Tribunal with respect to s 849 and s 851 and the application of s 826 of The Corporations Law. ASIC contends that the Tribunal misapplied s 826 in relation to the power to revoke securities dealers licences and failed to consider relevant matters raised by ASIC in determining whether to make a banning order against the third respondent.

12. ASIC submits that there is a reasonable likelihood that, following the hearing of the appeal, the matter will be remitted to the Tribunal for further consideration. The Tribunal ordered that conditions be imposed with a view to achieving more effective compliance with s 849(2) of the Corporations Act. If the matter were remitted there are other possible outcomes, including affirmation of the revocation orders originally made by the delegate of ASIC (‘the Delegate’) or the imposition of conditions additional to or different from those currently directed by the Tribunal.

13. The decision appealed from is complex factually and a consideration of those facts is raised in the notice of appeal.  The extent to which those matters are relevant to the appeal, on questions of law, remains to be determined and was not raised for consideration on this application. 

14. ASIC relies upon what it submits are good prospects of success on appeal and the undesirability of formulating licence conditions twice.

15. The respondents are not carrying on any existing business.  ASIC points out that there is, therefore, no existing business or third parties, such as employees, who would be affected by a stay.  No application for a stay of the Delegate’s decision was made to the Tribunal pending that hearing.  The third respondent’s evidence, not objected to, was that no such application was made because the Respondents’ financial services business had been substantially sold prior to the Delegate’s decision and third parties had indicated to him a reluctance to deal with any of the respondents until ASIC’s allegations had been tested before an independent body, such as the Tribunal.  The third respondent’s evidence is that, since the Tribunal’s decision, he has been approached by a number of third parties to explore business opportunities, which are not available to him while he is on ASIC’s records as a banned person, which he has been since the Tribunal’s decision.

16. In considering s 851 of The Corporations Law, the Tribunal accepted that there were deficiencies by the respondents but also found that they were inadvertent and that the respondents aimed to comply with the requirements of the section. The Tribunal also observed that the respondents’ procedures had been substantially reviewed between the initial review and the hearing before the Tribunal. This is of importance as the jurisdiction is protective, not punitive. The Tribunal ordered that the licences of the first and second respondent be reinstated subject to appropriate conditions to achieve more effective compliance with s 849(2). In the reasons for decision, the Tribunal referred to the appointment of an independent compliance consultant as such a condition.

17. In view of those orders, the findings of the Tribunal with respect to s 851 and the evidence of the third respondent, I see no sufficient reason raised by ASIC to deprive the respondents of the benefit of the decision of the Tribunal. It is then a matter for the respondents to make decisions that take account of the existence of this appeal and the possibility that the appeal will be successful and the matter remitted to the Tribunal. No matter has been put to me, other than the need to formulate conditions twice, that leads to the conclusion that the effectiveness of the hearing and determination of the appeal would be negatively affected by refusing to grant a stay. I do not propose to grant the stay.

18. There is no need to make an order for expedition. As the undertaking was not offered prior to the hearing of the motion and as the matter was also before the Court for directions, costs should be costs in the cause.

    ORDERS

19. I make the following orders:

    1The notice of motion be dismissed.

    2The costs of the motion be costs in the cause.

I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett.

Associate:

Dated:             23 July 2003

Counsel for the Applicant:	R Darke QC with R Scruby
Solicitor for the Applicant:	Jan Redfern Australian Securities and Investments Commission
Counsel for the Respondents:	P M Wood
Solicitor for the Respondents:	Atanaskovic Hartnell
Date of Hearing:	15 July 2003
Date of Judgment:	23 July 2003