Baaini and Australian Securities and Investment Commission (Practice and procedure)
[2024] ARTA 296
•14 November 2024
Baaini and Australian Securities and Investment Commission (Practice and procedure) [2024] ARTA 296 (14 November 2024)
Decision and Reasons for Decision
Applicant: Adele Baaini
Respondent: Australian Securities and Investment Commission Tribunal Number: 2024/5204
Tribunal: General Member M Stratos
Place: Sydney
Date: 14 November 2024
Decision:Pursuant to 19(2) of the Administrative Review Tribunal Act 2024 (Cth), and upon application by the Applicant, the Tribunal extends the time for the making of an application for review of the decision of the Respondent to 21 July 2024.
.............................[SGD]. ................................
General Member M Stratos
CATCHWORDS
EXNTENSION OF TIME – Application for extension of time in which to seek review of a decision – Applicant's request some 60 days out of time – consideration of Extension of Time Principles – short length of delay – lack of prejudice to the Respondent – significance of the outcome – arguable case – Tribunal satisfied reasonable in all the circumstances to grant request
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth)
Administrative Review Tribunal Act 2024 (Cth)
Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 Administrative Review Tribunal Rules 2024
National Consumer Credit Protection Act 2009 (Cth)
CASES
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Benjamin v Commissioner of Taxation [2016] FCA 1157 Comcare v A'Hearn (1993) 45 FCR 441
Davies v Australian Securities Commission (1995) 59 FCR 221
Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344
Outboard Marine Australia Pty Ltd v Byrnes; Bauknecht (Third Party) [1974] 1 NSWLR 27
Phillips v Australian Girls' Choir Pty Ltd & Anor [2001] FMCA 109
Secretary, Department of Family and Community Services and Roberts (2003) 73 ALO 412
Statement of Reasons
On 21 July 2024, Ms Adele Baaini (the Applicant) lodged with the Administrative Appeals Tribunal - now Administrative Review Tribunal (the Tribunal) - an application for an
extension of time in which to seek review of a decision of the Australian Securities and Investment Commission (the Respondent) dated 18 April 2024. The decision under review banned the Applicant from providing credit activities permanently on the grounds of dishonest conduct.
The Respondent opposes the Applicant's request for an extension of time that is brought some 60 days out of time.
On 14 October 2024, the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) was repealed and replaced with the Administrative Review Tribunal Act 2024 (Cth) (ART Act). The Administrative Review Tribunal (Consequential and Transitional Provisions No 1) Act 2024 (ART (C&TP No 1) Act) Schedule 16, Part 5, item 24 provides that a proceeding in the AAT that was not finalised before transition time must be continued and finalised by the Administrative Review Tribunal (the Tribunal). Anything done in relation to such a proceeding prior to the transition date continues to have effect after the start date of the ART Act.
The Applicant was unable to attend the initial interlocutory hearing scheduled for 24 October 2024 due to family reasons. Both parties at that time were directed to file any submissions they wished the Tribunal to consider. The Respondent filed submissions with attachments on 4 November 2024, while the Applicant did not respond to the direction of the Tribunal in writing.
On 6 November 2024, the Tribunal held an Interlocutory Hearing by telephone to determine the extension of time application. The Applicant appeared on her own behalf and gave oral evidence. The Respondent was represented by Ms Felicity Bentley of counsel instructed by Ms Rees and Mr Dawson of the Respondent.
ISSUE
The issue for this Tribunal to consider is whether the Tribunal is satisfied that it is reasonable in all the circumstances to extend the time for the making of an application to the Tribunal for review of the decision dated 18 April 2014.
LEGISLATION
The prescribed time within which an application must be lodged is set out in section 18 of the ART Act. That section states that an application for review of a decision must be made within the period prescribed by the Administrative Review Tribunal Rules 2024. The Rules provide at Part 2 Section 5(3) for a period of 28 days after notice or the Statement of Reasons is given to an applicant.
Section 19 of the ART Act allows the Tribunal to extend this period of time upon application by an applicant if the Tribunal considers it is reasonable in all the circumstances to do so.1
EXTENSION OF TIME PRINCIPLES
When considering whether the discretion to extend time should be exercised, a decision maker should have regard to the factors identified by Wilcox J in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 as modified by the Full Court of the Federal Court in Comcare v A'Hearn (1993) 45 FCR 441. Those factors were outlined in Phillips v Australian Girls' Choir Pty Ltd & Anor [2001] FMCA 109 and are relevantly summarised below:
(i)There is no onus of proof upon an Applicant for extension of time. Special circumstances need not be shown, but the application will not be granted unless the decision maker is positively satisfied it is proper to do so. The 'prescribed period' is not to be ignored.
(ii)It is not a pre-condition for success that an acceptable explanation for delay must be given although it is to be expected that such an explanation will normally be given as a relevant matter to be considered. Action taken by the applicant is relevant in assessing the adequacy of the explanation for the delay. It is relevant to consider whether an Applicant has rested on their rights and whether the Respondent was entitled to regard the matter as being finalised.
1 Relevantly, section 29 of the now repealed AAT Act contains provisions in similar terms to the ART Act, prescribing a 28 day period in which to seek review and the ability to extend time if t is reasonable in all the circumstances to do so
(iii)Any prejudice to the Respondent, including any prejudice in defending the proceeding occasioned by the delay, is a material factor acting against the grant of an extension. The mere absence of prejudice is not enough to justify the grant of an extension.
(iv)The merits of the substantial application are to be taken into account in considering whether an extension of time should be granted.
BACKGROUND
The Applicant holds tertiary qualifications in financial planning and has worked in the industry as a financial adviser since 2011.
Since 1 January 2019, financial advisers have been required to pass the financial adviser exam (the exam). Financial advisers were given until 1 January 2022 to pass the exam to be able to continue to provide personal advice to retail clients on relevant financial products. An adviser who failed the exam at least twice before this date was granted an extension until 1 October 2022 to pass the exam. If the exam was not passed by these dates, a person would lose their status to be able to provide personal advice.
Prior to January 2022, the exam was administered by the Financial Adviser Standards and Ethics Authority (FASEA). Since January 2022, the Respondent has been administering the exam through the Australian Council for Educational Research.
On 3 April 2023, the Applicant successfully enrolled to sit the exam scheduled for 11 May 2023. The Applicant was advised that this booking was not confirmed until payment had been completed.
The Applicant commenced employment at AAN Wealth Management (the employer) in April 2023. On 14 April 2023, she provided to the employer an undated FASEA Certificate advising the Applicant had passed the exam on 31 August 2021.
A reminder was sent on 24 April 2023 to the Applicant to make payment to be able to sit the exam. When payment was not received, the Respondent advised the Applicant on 27 April 2023 the exam session was cancelled.
The employer updated the relevant Register regarding the Applicant's qualifications. On 20 June 2023, the Respondent contacted the employer to discuss the status of the Applicant. The employer made enquiries on the same day with the Applicant. On 22 June 2023, the Applicant resigned for the stated reason of 'personal issues' relating to the health of her husband.
Following an investigation and interview process, on 18 April 2024 the Respondent made a banning order against the Applicant pursuant to sections 80 and 81 of the National Consumer Credit Protection Act 2009 (Cth) (NCCP Act). That banning order permanently prohibited the Applicant from:
•engaging in any credit activities;
•controlling, whether alone or in concert with one or more other entities, another person who engages in credit activities; and
•performing any function involved in the engaging in credit activities (including as an officer, manager, employee, contractor or in some other capacity).
The decision of the Respondent found the Applicant was not a 'fit or proper person' as she had falsified the FASEA certificate, her conduct was dishonest, and she failed to accept responsibility for this action. The last page of the decision outlined that a person could seek independent review from the Administrative Appeals Tribunal and any application must be made in writing within 28 days of being told of the decision.
On 21 July 2024, the Applicant lodged with the Tribunal an application for review. She stated she had received the reviewable decision on 24 April 2024. On this basis, the 28 day lodgement period was due to expire by 22 May 2024. She advised that she wished to apply for an extension of time to make the application as she "was not aware that I can appeal the decision". The Applicant considered the decision under review was wrong because:
I admit I made a mistake as I didn't not know the severity of my action. As I have the highest education level a university degree in my field, I was not aware of needing the FASEA exam to work in my field. When I did find out it was too late.
APPLICANT'S SUBMISSIONS
The Applicant explained she had not been employed in the role of an adviser for very long and had not realised she needed the further particular qualification or that she was required
to sit an exam to gain such qualification. She only became aware of this requirement once she commenced work with her employer. At the time she provided the forged or altered certificate, she was in need of employment as financially she and her family were struggling. Her husband had been in and out of work and lived with injuries, and together they have two children to raise.
The Applicant accepted and acknowledged she made a mistake in falsifying the certificate given to her employer. Since the banning order was made, the Applicant's mental health has suffered. She felt remorse for her actions.
As to the reason for the two-month delay in applying for review by the Tribunal, the Applicant stated she was not aware she had 30 days to apply for review. She was unable to seek legal advice or representation due to significant cost barriers. The banning order had affected her to such an extent mentally and emotionally that she was unable to apply for review any earlier. She has still not recovered her health.
In relation to the merits of the substantive application, the Applicant argued that a lifetime or permanent banning order was not the correct decision. The Applicant considers that in all her years working in this sector, at times with well-established and reputable companies, she has always been compliant with requirements and has had no other instances of concern. She is cognisant of the requirement to live an ethical and moral life and has tried to bring that to both her personal and work circumstances. She never sold products to her clients that she did not believe in, or that was only to obtain an incentive or commission from her clients.
Since the banning order was made, she has been unable to work in the financial industry. She has undertaken manual work since 2023, performing cleaning duties to earn money.
RESPONDENT'S SUBMISSIONS
The Respondent provided written submissions dated 4 November 2024. Counsel for the Respondent confirmed nothing in the evidence of the Applicant given at the hearing would materially change the position of the Respondent.
The Respondent contended the Applicant has not provided a reasonable explanation for the delay in seeking to review the decision of the Respondent. The only explanation
provided by the Applicant was she was not aware she could appeal the decision. The Respondent challenged this statement as the decision clearly stated her rights of review, in an information sheet attached to the decision.
Secondly, the Respondent notes the Applicant must have read the decision at the time it was issued, as she made contact with the Respondent on 18 April 2024 to query whether she could perform certain work as a result of the ban.2
Although the Respondent did not consider there to be any prejudice to it in allowing an extension, it was submitted there is a public interest in the finality of decisions.
The Respondent submitted the Applicant has not demonstrated there to be any reasonable prospects of success. The Respondent explained the conduct of the Applicant upon which the decision was based at paragraph 18 of their submissions:
The applicant never sat the Exam. The certificate she provided to AAN Wealth was falsified. Due to the fact that the applicant did not pass the Exam by 1 January 2022 (or qualify for any extension due to sitting but failing the exam), she was no longer qualified, from 1 January 2022 to provide personal advice to retail clients. Despite this, in the period of her time at AAN Wealth, the applicant gave personal advice to 121 retail clients whilst knowing she was not authorised to do so.
Following the authorities of Davies v Australian Securities Commission (1995) 59 FCR 221 and Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, the Respondent considered the behaviour of the Applicant demonstrated poor character and judgment, dishonesty and a flagrant disregard for the law and regulation. As such, the banning order was appropriately made on the basis she is not a fit and proper person to engage in credit activities pursuant to section 80(1) of the NCCP Act.
The Respondent further noted the Applicant does not appear to have offered any explanation for falsifying the certificate or shown any remorse for her actions. Any remorse expressed, submitted by the Respondent, was for the Applicant's own situation, not for the actions she undertook in falsifying the certificate or advising clients in such circumstances. The seriousness of the conduct has not been appreciated.
2 Page 93 Respondent's Attachments to Submissions - Index to Attachments
Similarly, the Respondent considered the Applicant's actions demonstrate she tried to sit the exam prior to the commencement of her employment but yet made an active decision in not pursuing the exam, and then commenced working without that qualification. She knowingly forged that qualification and gave advice to clients when unauthorised to do so. The Respondent contends the Applicant had no desire to remedy the situation by confessing her actions to her employer or sitting the exam.
The Respondent considered these actions amount to serious misconduct that cannot be explained away as a mistake. These actions were said to be those of someone who would not meet the 'fit and proper' test and as such there was nothing to suggest the substantive application had any prospects of success.
The Respondent accepted the Applicant would rightly be distraught by the banning order, but was concerned she had not demonstrated appropriate engagement with the regulator in a timely or productive manner. Similarly, the Applicant had not been active during the life of this application at the Tribunal, in that two opportunities to provide written submissions were ignored and no response was received to other Tribunal correspondence.
The Respondent also accepted there would be prejudice to the Applicant in not allowing an extension of time to review the substantive application, in that she can no longer work in the credit industry. It was noted the Applicant had not sought review of a similar banning order made on the same date in relation to her ability to work in financial services. 3 The Applicant had not sought review of that other decision. As such, setting aside or varying the substantive decision at this Tribunal in relation to the ban on providing credit activities would be unlikely to impact her ability to continue to work in her chosen profession as she would still be prohibited pursuant to the other order dated 18 April 2024 from providing any financial services.
3 On 18 April 2024, a second decision was made by the Respondent permanently prohibiting the Applicant pursuant to s920A and 9208 of the Corporations Act 2001 (Cth) from providing any financial services, controlling or performing any function involved in carrying on a financial services business.
CONSIDERATION
In determining whether the Tribunal is satisfied it is reasonable in all the circumstances to extend time, the Tribunal must weigh together the relevant factors as outlined in Hunter Valley.
Reason for Delay
The Applicant sought review of the banning order decision approximately two months out of time. It was explained at the hearing that she was not aware of her rights of review, did not have funds to seek advice and the state of her mental health was poor as a result of the severe consequences of that decision.
Although this is not a significant delay, it cannot be assumed that the Tribunal will always grant a short extension of time. 4 The limitation period is the general rule, the rationale for which is that there is a legitimate public interest in disputes being settled as quickly as possible. A provision to extend time is the exception to that rule.
The Applicant claims to have not been aware of her rights of review, contributing to the delay in lodging her application. The Tribunal notes such information was attached to the decision of the Respondent, which the Applicant clearly received on the date it was made.
It was not clear from the Applicant's evidence what eventually caused her to realise and act on her review rights thereafter. Although the Applicant stated she had not been in a position to obtain legal or other advice when she received the decision, this does not explain why the Applicant was unable to nonetheless seek review at an earlier point in time. The Tribunal considers the Applicant should regardless have been aware of her rights, given the explanation of such in the reviewable decision received.
The Applicant was able to engage with the Respondent once she received the decision. On the day she received the decision the Applicant and an officer of the Respondent corresponded by email after the Applicant requested clarification as to whether she could work as a BDM for a life insurance company in light of the decision. Four days later, on 22
4 Re Secretary, Department of Family and Community Services and Roberts (2003) 73 ALO 412
April 2024, the Applicant sent an email to an officer of the Respondent expressing what appears to be her frustration with the Respondent's treatment of her actions in contrast to that of large companies or organisations.
The Tribunal acknowledges the distress receiving such a decision would have caused for the Applicant, given she had lost the ability to work in the financial sector where she had been employed over the previous ten years. The public nature of the banning order similarly can be understood to have an impact upon the Applicant. There was no evidence before the Tribunal to suggest the Applicant was impaired at the relevant time to render her incapable of seeking review.
Noting that a finding of a reasonable explanation for the delay is not required pursuant to the Hunter Valley principles, the Tribunal is nonetheless not satisfied that the Applicant could not have made an application within the prescribed period of time. However, given the shortness of the delay, the Tribunal finds this factor does not weigh either for or against the grant of an extension of time to seek review.
Prejudice
The Respondent did not argue there would be prejudice should the extension of time be granted. There is nonetheless a public interest in maintaining the finality of decisions and in not disturbing established practices of the Tribunal absent satisfaction that it is reasonable to do so in the circumstances.
There is no reason to assume any prejudice to the Respondent or other individuals should the Applicant be granted an extension of time to apply for review. The Tribunal is not satisfied that the public interest would be affected in allowing this application where a short period of time is in issue.
The mere absence of prejudice is not enough to justify a grant of an extension. The Tribunal considers this factor therefore weighs neither in favour nor against granting the extension of time.
Merits of the substantial application
As explained by Davies J in Benjamin v Commissioner of Taxation [2016] FCA 1157:
... the merits of the substantive application are relevant to take into account in the exercise of discretion as to whether to grant an extension of time, but this does not involve a determination of the substantive application. The matter to be addressed is whether an arguable case on the merits of the application is shown based upon the material relied upon by the applicant, and not upon an inquiry into the true existence of the facts....
The substantive issue to be determined should time be extended will be a consideration of whether the Applicant is a 'fit and proper person' to engage in credit activities, control another person who engages in credit activities or perform any function involved in the engaging in credit activities pursuant to sections 80 and 81 of the NCCP Act. If it is found she is not a fit and proper person for this purpose, the Tribunal will then need to consider the appropriate sanction thereafter, whether a permanent banning order or some other lesser period is the correct and preferable decision.
It is not for the Tribunal at this stage to embark on a full review of the substantive decision. Rather, a consideration of the Applicant's case at its highest is required, without making any findings of fact or as to the credit of the Applicant.
The Tribunal makes no finding as to whether it would ultimately be satisfied upon review that the decision should be set aside or varied. However, the Tribunal does consider, at its highest, the Applicant may have an arguable case that is best served in allowing the Applicant an opportunity to have the decision independently reviewed. The Applicant may argue that despite the seriousness of the events in question, they were confined to a limited period of time and such a discreet set of events should not lead to a finding that she is no longer a fit and proper person. In the event this finding is not disturbed, the Applicant may then argue that a permanent banning order is not the correct sanction but rather any outcome should reflect a ban for a different period of time.
The impact of the decision upon the Applicant is significant. A permanent banning order means she will be unable to ever work again in the profession for which she has trained. This will likely lead to a significant impost upon her ability to earn, future livelihood and her own well-being.
The Tribunal notes the submission made by the Respondent as to the utility of allowing a challenge to the banning order in relation to credit activities, when the Applicant has not sought review of the banning order regarding the provision of financial services. Any
different outcome in relation to the credit activities would not change the Applicant's ability to work in the financial industry. The Applicant at the interlocutory hearing indicated she was unaware that only one decision of 18 April 2024 had been provided to the Tribunal in her application for review. It may be the Applicant seeks to rectify this by challenging that second decision in the future, or she may choose not to take this path. This issue goes to the practical scope of the outcome of any decision, but in the Tribunal's view does not change the ability to seek review or impact the reasonable prospects of success in relation to that particular decision.
Reynolds, Hutley and Bowen JJA said, in Outboard Marine Australia Pty Ltd v Byrnes; Bauknecht (Third Party) (1974] 1 NSWLR 27 at 30:
We appreciate that the rules of court, particularly those relating to time, should never be allowed to be an instrument of tyranny. They do, however, have purposes, one of which is that the parties may know where they stand and regulate their affairs accordingly. It is also appreciated that where genuine issues ought to be litigated, if such can be done with fairness to all concerned, it is appropriate to take a benign view of applications to extend time.
The Tribunal considers the substantive application cannot be said to have no prospects of success. The Applicant may be able to persuade a decision maker that a different outcome should be reached. This is not an assessment of the Applicant's likelihood of success upon review, but rather that there is the potential for a different outcome. Given the significance of the issue to be determined for the Applicant, the Tribunal considers this factor weighs in favour of the grant of an extension of time.
DECISION
As outlined above, given the short length of delay in seeking review, the lack of prejudice to the Respondent, the significance of the outcome of the decision for the Applicant's future livelihood and the arguable case she may assert for a different outcome, the Tribunal is satisfied that it is reasonable in all the circumstances to extend the time for the making of an application to the Tribunal for review of the decision dated 18 April 2024.
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