Bolton and Australian Securities and Investments Commission
[2023] AATA 2022
•6 July 2023
Bolton and Australian Securities and Investments Commission [2023] AATA 2022 (6 July 2023)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2015/6020
Re:Nicholas Bolton
APPLICANT
AndAustralian Securities and Investments Commission
RESPONDENT
DECISION
Tribunal:Deputy President Bernard J McCabe
Date:6 July 2023
Place:Sydney
The Applicant’s application for review is dismissed under s 42A(5) of the Administrative Appeals Tribunal Act 1975 (Cth)
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Deputy President Bernard J McCabe, Deputy President
Catchwords
Practice and procedure – non-compliance by applicant with directions – where respondent seeking dismissal – where applicant warned matter would be dismissed in event of non-compliance – no reasonable explanation for delay given – matter dismissed
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Corporations Act 2001 (Cth)
Cases
AON Risk Management Services Ltd v Australia National University [2009] HCA 27
Bolton and Australian Securities and Investments Commission [2015] AATA 977
Bolton and Australian Securities and Investments Commission [2018] AATA 976
Bolton and Australian Securities and Investments Commission [2018] AATA 4215
Bolton and Australian Securities and Investments Commission [2021] AATA 5293
REASONS FOR DECISION
Deputy President Bernard J McCabe
6 July 2023
The Australian Securities and Investments Commission (ASIC) has asked the Tribunal to dismiss these proceedings under s 42A(5) of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act) in light of Nicholas Bolton’s failure within a reasonable time to:
(a)comply with directions made on 9 May 2023 requiring that he file an amended statement of facts, issues and contentions (SFIC) and the material he intends relying upon at the hearing by 14 June 2023; and
(b)proceed with the application.
The application for dismissal was foreshadowed at a directions hearing on 20 April 2023. The event was listed to discuss the non-compliance of the applicant, Mr Bolton, with earlier directions that he file an amended SFIC and additional material in support of his application. ASIC asked the Tribunal at the directions hearing on 20 April to make any extensions of time on the directions subject to a guillotine order. I gave the extension but declined to make the guillotine order: while those orders may have a place when dealing with persistent non-compliance, they must only be used where it is possible to precisely determine whether the terms of the order have been satisfied. They are likely to produce confusion if there can be any dispute over whether an applicant has actually done what is required.
While I declined to make the guillotine order, I made clear to the applicant that the extension was given on the strength of assurances from his representatives that the material would be filed by 14 June 2023. Mr Bolton’s representatives were warned on that occasion what would happen if the applicant failed to comply with the directions: they were told it would be necessary for them in that event to file material by 19 June 2023 explaining why the proceedings should not be dismissed pursuant to s 42A(5). That warning was repeated in correspondence from the Tribunal dated 9 May 2023. A directions hearing was scheduled for 23 June to deal with the proceedings. It was made clear in advance that any non-compliance with the directions would be addressed at the listed event. The applicant could be in no doubt that the Tribunal would consider dismissing the proceedings under s 42A(5) of the AAT Act at the listed event if he failed to comply with the directions.
The applicant did not comply with the directions, and he has not filed appropriate material explaining why the proceedings should not be dismissed. His new lawyers have asked for an adjournment of the non-compliance directions hearing.
The directions made on 20 April 2023 and the warnings which accompanied them were made in circumstances where these proceedings have already been wracked by significant delays. They have already been dismissed once pursuant to s 42A(5) of the AAT Act and then reinstated. While there have been many explanations for those delays, the applicant’s default in complying with directions has been an important factor.
One aspect of the applicant’s conduct of the proceedings is particularly noteworthy for present purposes. He has been represented by a procession of different law firms. Dr Bender, who appeared for ASIC, surmised that the applicant has been unable to pay his lawyers and some of them may have exercised a lien over their files. In any event, the lawyers who appeared at the non-compliance directions hearing on 23 June are the eighth firm in that procession of representatives. Importantly, the applicant’s latest firm was only engaged to represent the applicant on 21 June 2023, with counsel being briefed the following day. To be clear: the firm was engaged almost a week after the date on which the material was to be provided in compliance with the directions of 23 April, and it was after the date on which the Tribunal had told the applicant he should be prepared to file material explaining why the proceedings should not be dismissed in the event of his non-compliance. His former representatives who appeared at the directions hearing on 20 April 2023 - who gave assurances that the applicant would be able to comply with the directions in a timely way – ceased to act for the applicant shortly thereafter.
The applicant’s new representatives wrote to ASIC on 22 June 2023 asking for ASIC’s consent to a two-week adjournment so they might come to grips with the file. ASIC declined to give that consent. When the matter came on for the listed event, Mr Robins KC, who appeared for the applicant, formally requested the adjournment. He pointed out he was unable to meaningfully respond to the application for dismissal given he had only recently come into the matter. He asked that the non-compliance directions hearing be adjourned until 6 July.
The correspondence from the applicant’s new solicitors to ASIC dated 22 June refers to the applicant’s difficulties in securing the funding required to progress the matter. It also refers to the fact he was reliant on a third party who assumed “carriage of the matter pursuant to its rights under an indemnity deed” as of 31 May 2023 at which point “Mr Bolton has not been responsible for the instructions on the matter”. It turns out the third party made the decision to instruct new solicitors. It is unclear what progress (if any) the former solicitors made towards complying with the directions. If the non-compliance directions hearing is adjourned, that will give the new solicitors an opportunity to (a) explain the non-compliance that has occurred to date, and (b) assure the Tribunal how things will be different if the proceedings remain on foot. In particular, the letter explained the adjournment is sought:
…for the purpose of endeavouring to find a way of finalising the proceeding without a contested final hearing, given that the proceeding has been rendered nugatory by the passage of time.
As it happened, I was unable to rule on ASIC’s application for dismissal before the directions hearing concluded in light of other listings. I indicated I would decide overnight (as it were) whether I was prepared to grant the adjournment sought by Mr Robins on the applicant’s behalf. I explained I would make directions to that effect if I acceded to the request. Alternatively, if I decided against the application for adjournment, I said I would proceed to decide the application for dismissal. I had the benefit of written and oral submissions from ASIC on the application for dismissal, and Mr Robins confirmed he was understandably reluctant to make submissions on that question given he was so new to the matter.
The adjournment application
The Tribunal is required to proceed in a way that is procedurally fair. But the obligation is not open-ended. As the High Court explained in AON Risk Management Services Ltd v Australian National University [2009] HCA 27, the review must keep in mind other objectives, including the need to minimise costs, avoid unnecessary delay, and maintain public confidence in the competence, integrity and efficiency of decision-making processes. The Tribunal is also obliged to pursue the objective in s 2A.
Mr Robins said it would be unfair to decide the dismissal application at the hearing on 23 June in circumstances where the applicant’s new solicitors have not had the chance to engage with the material with a view to making meaningful submissions on the question. Mr Robins points out there is no prejudice to ASIC arising from an adjournment.
Several things can be said about that. First, the applicant has had ample opportunity to comply with the directions, and he has been on notice that non-compliance would result in a request for dismissal at a directions hearing that was scheduled for 23 June in anticipation of that possibility. He was also aware that, if he failed to comply with the directions, he should file material in advance of the directions hearing on 23 June explaining why the matter should not be dismissed – so that he would be ready to make submissions and potentially receive a decision on that day. He was certainly aware of ASIC’s attitude and argument to dismissal: all that has been addressed in material provided in connection with previous non-compliance processes – most obviously the affidavits of Ms Birch dated 15 June 2021 and 13 August 2021 that were referred to again at the last directions hearing where ASIC asked for a guillotine order. I acknowledge Mr Bolton’s solicitors are new to the matter, and do not criticise them as professionals for being unready in the circumstances. But that is because Mr Bolton (or those who purport to act in his stead) have chosen to brief yet another set of solicitors and counsel at the last possible moment. If the professionals are not ready, that is Mr Bolton’s fault.
Second, the effective removal of the applicant and his replacement (at least for the purposes of instructing his legal representatives in the conduct of the proceedings) is a surprising development that has not been adequately explained. It is not clear what relevance that development has to my deliberations, at least for present purposes. At a minimum, it suggests these proceedings are now being delayed – and may yet be delayed further, if the applicant has his way – to suit the convenience of someone who is not actually a party to the proceedings.
Third, the fact the proceedings have already “been rendered nugatory by the passage of time” must give me pause before doing anything that prolongs the matter. I note the applicant has said in the past his motivation was to remove a stain on his reputation which remains even though he has now served out the period of disqualification: see affidavits referenced in the reasons for decision of the Tribunal in Bolton and Australian Securities and Investments Commission [2021] AATA 5293 at [43] per SM Groom. Yet the apparent takeover of the proceedings by the third party suggests something else is going on. There has been some discussion of the need for the applicant to succeed at the final hearing if he is to take advantage of an indemnity agreement with the third party: at [42]. While all might be revealed at an adjourned hearing, there must be some question over the point in waiting for that to occur given the expense and delay involved.
Fourth, ASIC will experience prejudice in the event of an adjournment, at least in the sense it will have thrown away costs attending the non-compliance directions hearing and might now be required to attend on a subsequent occasion. The regulator – and the Tribunal, for that matter – are expending public moneys, and it behoves the Tribunal to be conscious of the expense associated with adjournments and delays. The Tribunal is generally a ‘no costs’ jurisdiction, which means I cannot order the applicant to pay ASIC’s costs which would in any event be thrown away.
In all the circumstances, I am not inclined to adjourn the proceedings. Both parties have been given adequate opportunity to present evidence and make submissions on the dismissal application. Only one party has availed itself of the opportunity, despite express warnings about the consequences of non-compliance – and despite instructions about the need to ‘show cause’ in a timely way in anticipation of the scheduled directions hearing should there be non-compliance. Allowing yet another adjournment in the face of all the warnings because yet another firm of solicitors has been engaged at the last minute would call into question the proportionality and efficacy of the Tribunal’s review process. It would also put the respondent to yet more expense in circumstances where the decision-maker and the Tribunal are both expending public resources. When one has regard to the objective in s 2A, it is clear the better, more efficient course is to proceed to deal with the application for dismissal before me having regard to the material provided and the history of these proceedings.
The application for dismissal
The application for dismissal must be understood in context. The proceedings have a lengthy history. They arise out of a delegate’s reviewable decision under s 206F of the Corporations Act 2001 (Cth) on 6 October 2015 to disqualify Mr Bolton from managing corporations for three years. Mr Bolton sought review of that decision in the Tribunal. The review did not proceed smoothly. In her affidavit dated 15 June 2021, Ms Birch, an ASIC officer, noted the review was listed for hearing events on seven occasions. Those hearings were adjourned at the request of the applicant, or as a necessary consequence of the applicant’s conduct: at [8]-[11]. The circumstances of those adjourned and delayed events were also addressed in Ms Birch’s second affidavit dated 13 August 2021.
The proceedings have been punctuated with interlocutory applications. The first of these was a stay hearing. The Tribunal declined to order a stay, which meant the reviewable disqualification decision remained in effect: see Bolton and Australian Securities and Investments Commission [2015] AATA 977. The three-year disqualification period imposed on the applicant finally expired on 14 December 2018.
The proceedings became more complicated after ASIC sought to adduce evidence at a hearing about Mr Bolton’s apparent contravention of s 206A of the Corporations Act. Section 206A says a person commits an offence if they are involved in the management of a corporation while disqualified. The evidence of Mr Bolton contravening s 206A was set out in findings of the Takeover Panel. The Tribunal concluded Takeover Panel material was admissible in the review proceedings: see Bolton and Australian Securities and Investments Commission [2018] AATA 976 per DP Forgie. The Tribunal separately made orders pursuant to s 38AA of the AAT Act relating to documents recording its communications with a liquidator: see Bolton and Australian Securities and Investments Commission [2018] AATA 4640.
The applicant also commenced proceedings in the Federal Court against ASIC and (separately) the Commissioner of Taxation. ASIC pointed out costs’ orders were made against the applicant in those proceedings after they were withdrawn. The applicant has not yet settled his debt to ASIC.
The Tribunal proceedings were dismissed by DP Forgie on 16 November 2020 pursuant to s 42A(5) of the AAT Act. The dismissal was ordered on the basis of the applicant’s failure to proceed with the application within a reasonable time. ASIC notes the dismissal occurred at the Tribunal’s own motion after the Tribunal had been unable to contact the applicant despite repeated attempts: affidavit of Ms Birch dated 21 June 2023 at [8]. The dismissal order recorded the reasons for dismissal as follows:
UPON APPLICATION of the applicant lodged on 18 November 2015 for review of a decision of the respondent dated 6 October 2015 AND UPON the applicant’s failing to contact the Tribunal after two phone calls were made to the applicant’s representative, Baker McKenzie on 24 September 2020 and 9 November 2020 AND UPON BEING SATISFIED that appropriate notice was given to the applicant IT IS ORDERED that the application be dismissed under section 42A(5) of the Administrative Appeals Tribunal Act 1975 for the applicant’s failure to proceed.
Mr Bolton said he only became aware of the dismissal four months after it occurred. It took him a further two months – until 16 April 2021 – to apply for reinstatement. He argued the dismissal occurred as a result of a procedural error on the part of the Tribunal. The error supposedly lay in the Tribunal’s failure to signal in advance that it was considering dismissing the matter under s 42A(5). The applicant argued at the reinstatement hearing that this error could be remedied through reinstatement pursuant to s 42A(10). The Tribunal agreed: see Bolton and Australian Securities and Investments Commission [2021] AATA 5293. In the course of his reasons on the reinstatement decision, SM Groom reflected on the lengthy delays that had occurred before the proceedings were dismissed. While he said both parties bore some responsibility for the unsatisfactory progress, he was critical of the applicant’s performance. He noted the applicant’s delays were likely attributable in part to funding issues, but he expressed the hope that those issues had been resolved by the applicant’s changing circumstances: at [39]-[41].
It appears the funding difficulties persisted once the proceedings resumed. In any event, there has been further delay. Not all of it was attributable to the default of the parties: a considerable amount of time was expended in an interlocutory dispute over the production and inspection of documents that was finally resolved in December 2022: see Bolton and Australian Securities and Investments Commission [2018] AATA 4215.
Yet a significant part of the delay is attributable to the applicant, and to the applicant alone. He failed to comply with a direction made in August 2022 requiring that he file material by 16 December 2022. On 21 December, his then solicitors withdrew. ASIC says the former solicitors exercised a lien over the applicant’s file in respect of unpaid costs. He did not secure new solicitors until 13 March 2023. At the directions hearing on 20 April, the applicant’s new representative relied on the firm being recently engaged as a reason for, or at least a potential remedy for, the non-compliance. The representative indicated they were confident the applicant would be able to proceed in accordance with the timetable. After hearing from both parties and reviewing the sorry record of slow progress, I agreed to make fresh orders that did not include a guillotine order as ASIC requested. The transcript of the hearing (reproduced in the Respondent’s submissions dated 22 June 2023 at [29]) records me saying:
[W]hat I’m proposing to do is set the date for the 14 June for the applicant to file the SFIC and its materials, the updated SFIC and its materials which would be a close of its evidence save for any other material that was genuinely responsive in reply. So that’s by 14 June and then set down a directions hearing in the following week which will become a non-compliance direction hearing in the event that the direction hasn’t been complied with. And I put the applicant on notice now or put this in the – the covering letter that if the applicant fails to comply with the direction, it will need to show cause at that directions hearing as to why the matter should not be dismissed under 42(a)(5).
Now, and I think that the applicant should be under no illusions about what will happen on that event – happen at that event, about how seriously I’m going to take an application or the prospect of exercising the power of dismissal if the orders haven’t been complied with. Because this matter’s gone on long enough. There has been ample opportunities to prepare the material, the funding issues at the end of the day are not a good explanation for the delay. Now, they might be a reason for the delay, but they’re not an acceptable explanation for the delay…
…
…The directions will be as indicated. That the applicant’s updated SFIC and materials to be provided by 14 June, with a further direction that there will be a directions hearing set down for 9 am on 23 June to be conducted by Microsoft Teams with the instruction that if the direction no.1 requiring that the material be filed by 14 June, if that is not complied with, then the applicant will be directed to provide materials and submissions in support of explaining why the matter should not be dismissed under 42A(5)by close of business on Monday 19 June.
In the covering correspondence which accompanied the direction, the Tribunal wrote:
The applicant is reminded that should they fail to comply with the attached directions then the case management direction hearing listed for 23 June 2023 will become a non-compliance direction hearing. The applicant will be required to show cause why the matter should not be dismissed pursuant to s42A(5) of the AAT Act.
Section 42A(5) of the AAT Act incorporates a discretion to dismiss which is enlivened if the applicant “fails within a reasonable time…to proceed with the application…or…comply with a direction by the Tribunal in relation to the application”.
The question of what amounts to a reasonable time is, in a sense, impressionistic. There is no point offering synonyms for the words “reasonable time”: they are ordinary English words that everyone understands. When determining whether an applicant has had reasonable time, one must have regard to the history of the matter, and the circumstances of the applicant, and determine whether the applicant has had a reasonable time. One undertakes that analysis in the shadow of the objective in s 2A, and having regard to the interests of the decision-maker that expends public resources in the review process. I must ask whether, in all the circumstances, the applicant has failed to do that which is required in the direction within a reasonable time or – where the contention is that they have failed to proceed – whether they have failed to make the progress they should have made within a reasonable time. Once the discretion is enlivened because a reasonable time has been exceeded, one must be conscious of the consequences for the applicant who would lose its right to review the reviewable decision in the Tribunal. The discretion will also be informed by the objective in s 2A. The power is not to be exercised punitively; one must consider what remains to be done to bring the matter on for a hearing. Sometimes, the best course is to just move on and list the matter for a hearing.
Mr Bolton remains non-compliant with the Tribunal’s direction that he (a) file an amended SFIC and (b) provide the additional evidentiary material upon which he intends relying at a hearing, such as further witness statements. In deciding whether he has failed to comply with that direction within a reasonable time, I must look to the history of the matter.
The sorry history of the matter weighed heavily in SM Groom’s decision when he considered whether to exercise the discretion to reinstate. ASIC pointed out in written submissions that counsel for Mr Bolton at the reinstatement hearing had said:
…if he misses a deadline, well, he’ll be well and truly on notice that if he misses the deadline his proceeding might be dismissed. And in those circumstances, well, one couldn’t complain about it. If he’s told, going forward,
‘You need to meet these deadlines, make sure your case is properly funded and there’ll be no more delays.’
We all want to get it dealt with. Presumably nobody wants to get it dealt with more than Mr Bolton. If he misses a deadline because he can’t raise the funds, if that were to be the case, well, it’ll be pretty easy decision to make to dismiss it under section 42A(5) with appropriate notice.
In his reasons for decision allowing the reinstatement, SM Groom addressed the funding difficulties that had apparently been an issue. He concluded with the observation (Bolton and Australian Securities and Investments Commission [2021] AATA 5293 at [41]):
…the Tribunal is satisfied that the applicant is now well and truly on notice that any further delay by the applicant in progressing the matter to completion of the final hearing would leave him very vulnerable to a dismissal of the application.
A direction requiring the applicant to file an updated SFIC and evidentiary material – in substance, the same direction I made following the directions hearing in April - was first made on 29 August 2022 by SM Groom. The direction required that the material be provided by 16 December 2022. The applicant missed that deadline. His then solicitors formally ceased to act for him shortly thereafter. The applicant approached another firm and he informed ASIC they would shortly be contacted by his new representatives. The new representatives were not formally engaged for some time: they finally contacted ASIC and the Tribunal on 13 March 2023. It became apparent at a directions’ hearing held on 20 April 2023 that nothing substantive had been done on the file towards complying with the direction, presumably because the applicant’s former solicitors were asserting a lien. In advance of that hearing, the applicant’s new solicitors had proposed a fresh timetable that involved the applicant being given until 14 June 2023 to comply with the direction.
The Tribunal made directions giving the applicant the timetable which it asked for. I note Ms Birch’s affidavit records in the timeline (p 39 of the pdf version) that ASIC subsequently wrote to the applicant’s representatives and provided copies of the relevant documents from ASIC’s file on 15 May 2023 in light of the difficulties experienced in obtaining release of the applicant’s file from his former lawyer. It follows the applicant has had access to the documents he needed to comply notwithstanding the wrangling with his former lawyers.
I acknowledge the documents in this case are voluminous (although it is unclear how many of them would be relevant at the final hearing). But it is not as if the applicant’s lawyers were overwhelmed in May 2023. The failure to comply with the direction by 14 June appears to be attributable to the fact the applicant was dealing with those who were funding his litigation. At some point a decision was made to engage yet another firm of lawyers.
It follows the applicant has had since August 2022 to comply with the directions. I acknowledge he has experienced funding challenges along the way which may have complicated his task of obtaining and keeping legal representation, but that is a reason for the delay, not an excuse. Having competent legal representation is obviously convenient for the applicant, and it generally works to the advantage of the review process. But it is not essential. Applicants can proceed in the Tribunal without legal representation, and they commonly do so.
The applicant has not actually provided material which explain his position despite being given the opportunity to do so. I have already explained why I am unwilling to countenance further delay so that material might be put on. It is not clear what the applicant would say in any event given the way in which the third party that funded the litigation appears to have asserted direct control over the proceedings.
I am satisfied in all the circumstances that the applicant has failed to comply with the directions within a reasonable time. That means the discretion to dismiss has been enlivened.
These proceedings have been on foot for a long time – so long that the disqualification period has already been served. Indeed, it is unclear what the applicant can achieve at this stage if the proceedings remain on foot: while there is a prospect of vindication should he succeed at the final hearing, there is also a risk that he might be further criticised by the Tribunal in light of the evidence about contraventions of s 206A. The applicant has been on notice since the time of the reinstatement hearing of the importance of complying with the directions in a timely way given that delay. It is also unclear when the applicant would be able to comply with the directions in the future given new solicitors have become involved.
Conclusion
The applicant has had a fulsome opportunity to progress the review. He has not done so. To allow the proceedings to continue would not be fair or efficient or proportionate to the uncertain end that the applicant seeks. Enough time and resources have been expended. The proceedings must be dismissed.
I certify that the preceding 38 (thirty -eight) paragraphs are a true copy of the reasons for the decision herein of Deputy President Bernard J McCabe
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Associate
Dated: 6 July 2023
Date(s) of hearing:
23 June 2023
Counsel for the Applicant:
Mr M Robins KC
Solicitors for the Applicant:
Allen & Overy
Counsel for the Respondent:
Dr P Bender with Mr A Hoel
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