Bolton and Australian Securities and Investments Commission
[2021] AATA 5293
•22 October 2021
Bolton and Australian Securities and Investments Commission [2021] AATA 5293 (22 October 2021)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2015/6020
Re:Nicholas Bolton
APPLICANT
AndAustralian Securities and Investments Commission
RESPONDENT
DECISION
Tribunal:The Hon. Matthew Groom, Senior Member
Date:22 October 2021
Place:Melbourne
The application is reinstated pursuant to section 42A(10) of the Act.
..........................[SGD]..............................................
The Hon. Matthew Groom, Senior Member
CATCHWORDS
PRACTICE AND PROCEDURE – reinstatement application – matter dismissed for failure to proceed with the application within a reasonable time – whether the application has been dismissed “in error” – consideration of applicant’s representatives’ conduct – whether application should be reinstated – application reinstated.
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth)
Corporations Act 2001 (Cth)
CASES
Charara v Federal Commissioner of Taxation (2016) 69 AAR 97
Goldie v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 367
Guse v Comcare [1997] FCA 1406
Katterns v Comcare [2002] FCA 1366
Mitchell and Comcare [2020] AATA 1464
Ripszam and Minister for Infrastructure and Regional Development [2014] AATA 216
REASONS FOR DECISION
The Hon. Matthew Groom, Senior Member
22 October 2021
INTRODUCTION
This matter involves an application for reinstatement pursuant to section 42A(10) of the Administrative Appeals Tribunal Act 1975 (Cth) (the Act). The substantive matter sought to be reinstated was summarily dismissed on 16 November 2020 by a Tribunal differently constituted.[1] The dismissal order was made pursuant to section 42A(5) of the Act (the dismissal order).
[1] The Tribunal was constituted by former Deputy President Forgie.
The substantive matter involves the applicant seeking review of a decision made by a delegate of the respondent on or about 6 October 2015 to disqualify him from managing corporations for a period of three years pursuant to section 206F of the Corporations Act 2001 (Cth) (the Corporations Act) (disqualification decision). On 18 November 2015 the applicant applied to have the disqualification decision reviewed in the Tribunal. The applicant also initially sought a stay order to prevent giving effect to the disqualification decision but that application was denied.
The applicant has now served out the period of his disqualification with the banning order against him having expired on 5 October 2018.
The disqualification decision arose out of claims made by the respondent against the applicant in relation to his role in the management of a number of companies of which he was a director and which were subsequently wound up with deficiencies in assets. The claims related to the applicant’s directorship of two groups of companies. The first group of four companies included Australian Style Pty Ltd; ACN 109 510 198 Pty Ltd (previously known as Australian Style Investments Pty Ltd); ACN 108 855 652 (previously known as Australian Style IP Pty Ltd) and Australian Style Services Pty Ltd. The second group of nine further companies included 56 Nerang Street Pty Ltd; Retail Finance Group Pty Ltd; Qikbiz Finance Pty Ltd; Australian Money Exchange Pty Ltd; Appliance Finance Wizard Pty Ltd; AMX No 1 Pty Ltd, AMX Marketing Fund Pty Ltd, AMX Club Ltd and PR Finance Group Ltd.
In making the disqualification decision the delegate concluded that the applicant’s management of the companies had contributed, at least in part, to the asset deficiencies of the first group of four companies on winding up. The delegate also concluded that the applicant had breached a number of specific provisions of the Corporations Act in his role as a director of the companies. The delegate concluded that in all of the circumstances disqualification for 3 years was justified.
In addition, the respondent has also made further claims against the applicant in respect of his post-disqualification conduct. Those claims include alleged breaches of section 206A of the Corporations Act in connection with the applicant’s involvement in Keybridge Capital Ltd (Keybridge Capital) and Aurora Funds Management Ltd and their respective investments in Molopo Energy Limited during the period the applicant’s disqualification was in effect. The claims of the applicant’s involvement arose principally out of published reasons handed down by the Australian Takeovers Panel in August 2017. Keybridge Capital is an ASX listed financial services company of which the applicant is now the managing director.
Following the summary dismissal of the substantive matter, on 16 April 2021 the applicant’s lawyers filed an application for reinstatement of the application pursuant to section 42A(10) of the Act. That application is the immediate matter for consideration by this Tribunal.
On 7 October 2021 an interlocutory hearing was held to consider the immediate matter. The applicant was represented by Mr Broadfoot QC and Mr Molesworth of counsel. The respondent was represented by Dr Bender and Dr Hoel of counsel.
CONSIDERATION
The substantive matter has a very lengthy and complex procedural history. It has been set down for final hearing on 7 separate occasions. On 6 of those occasions the listing was vacated. On the 7th occasion the matter went to final hearing, however, in the course of the hearing a number of procedural issues arose. The procedural issues included the manner of proceeding with respect to the section 206A claims as well as the need for confidentiality orders in connection with the claims. The procedural issues also included a request by the applicant for further documents to be produced pursuant to section 38AA of the Act which in turn involved various claims of legal professional privilege made by the respondent.
The matter was adjourned off part-heard for the purpose of allowing the Tribunal to give consideration to the procedural issues. On 24 April 2018 the Tribunal handed down a decision in relation to the section 206A and confidentiality issues. On 29 November 2018 the Tribunal handed down a decision in relation to the section 38AA issue which resulted in orders being made for the production of further documents by the respondent (the section 38AA decision). That decision also dealt with the respondent’s various claims for privilege.
Following the section 38AA decision in November 2018 the Tribunal received no further communication from either party to the application prior to its attempt to make contact with the applicant’s lawyers in relation to the matter on 24 September 2020 and 9 November 2020 by both telephone and email. The Tribunal will consider the precise circumstances surrounding those attempts at communication later on in these reasons.
The Tribunal received no response to its attempts at communication with the applicant’s lawyers and on 16 November 2020 the Tribunal made the decision to dismiss the application for failure to proceed with the application within a reasonable time relying on the power set out in section 42A(5) of the Act. That section provides as follows:
If an applicant for a review of the decision fails within a reasonable time:
(a) to proceed with the application; or
(b) to comply with a direction by the Tribunal in relation to the application;
the Tribunal may dismiss the application without proceeding to review the decision.
The dismissal order stated:
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.
After becoming aware of the dismissal order the applicant’s lawyers filed an application for reinstatement. That application was made on 16 April 2021 pursuant to section 42A(10) of the Act. Section 42A(10) provides that:
If it appears to the Tribunal that an application has been dismissed in error, the Tribunal may, on the application of a party to the proceeding or on its own initiative, reinstate the application and give such directions as appear to it to be appropriate in the circumstances.
Consideration of the application pursuant to section 42A(10) of the Act requires two issues to be determined. The first is whether the application was “dismissed in error” such that the Tribunal’s power to order reinstatement has been enlivened. In circumstances where the power is enlivened, the second issue to be determined is whether or not to exercise the Tribunal’s discretion to order the reinstatement.[2]
[2] See Ripszam and Minister for Infrastructure and Regional Development [2014] AATA 216.
The meaning of the words “dismissed in error” has been considered a number of times both by the Tribunal and also the Federal Court. The leading case is the Full Federal Court decision in Goldie v Minister for Immigration and Multicultural and Indigenous Affairs[3] (Goldie). In that decision the Court considered whether the word “error” as it is used in the section should be read down in some way or should otherwise only apply to an administrative error of the Tribunal. The Court decided that it should not. Carr J explained his reasoning at [73]-[77] as follows:
I would accept that a purpose of s42A(10) is to provide a power to reinstate an application which has been dismissed through administrative error on the part of the Tribunal. But I would not accept that s42A(10) must be construed as applying only where there has been administrative error. I would construe the word "error" as including administrative error but extending beyond mere administrative error.
I would reject the respondent's submission that when, on 17 December 1999, the Tribunal decided to dismiss the applicant's application, purportedly under s42A(2), he was confined to the remedy of either an application for a review or an appeal to this Court.
The Tribunal's decision of 17 December 1999 can, in my view, be properly characterised as in the nature of a default decision. That is, in default of consideration of whether there were even any prima facie merits in the application. There do not appear to be any policy reasons why, in those circumstances, such a narrow construction should be put upon s42A(10).
I accept the applicant's submission that the Tribunal, when it referred to the Explanatory Memorandum, should have had regard to s15AB(3) of the Acts Interpretation Act, which provides as follows:
"(3) In determining whether consideration should be given to any material in accordance with subs(1), or in considering the weight to be given to any such material, regard shall be had, in addition to any other relevant matters, to:
(a) the desirability of persons being able to rely on the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; and
(b) the need to avoid prolonging legal or other proceedings without compensating advantage."
In my view, there is a significant degree of desirability of persons being able to rely on the ordinary meaning conveyed by the word "error". More importantly, s42A(10) provides a mechanism of avoiding prolonging legal or other proceedings without compensating advantage. The mechanism is a relatively informal method of bringing a matter back to the Tribunal for reconsideration with a view to it being considered on the merits. It can be seen as a convenient, prompt and inexpensive means whereby errors which may have occurred in the exercise of the Tribunal's default jurisdiction can be rectified. That is, any sort of error in dismissing an application summarily, whether the error be administrative error or any other error.
[3] [2002] FCAFC 367.
In their reasoning Wilcox and Downes JJ made particular mention of the possibility of the concept of “error” for the purpose of the section extending to include an error of an applicant’s solicitor. They note at [29]:
We do not think it is necessary, in order to enliven the Tribunal's power under s42A(10), that the Tribunal, or a member or employee of the Tribunal, should have been at fault in relation to the dismissal. The fault may have lain elsewhere, provided it induced the error. For example, because of a mistake as to his or her instructions, a solicitor or other representative of a party might have wrongly consented to a dismissal order or filed a notice of discontinuance. No fault would attach to the Tribunal; but, if the solicitor's mistake induced the dismissal of the action, it could properly be said the application had been "dismissed in error".
The decision in Goldie was also applied in the Federal Court decision in Katterns v Comcare[4] (Katterns). In that decision Dowsett J specifically considered the application of section 42A(10) of the Act in the context of a breach of procedural fairness resulting from a failure to provide notice prior to dismissal pursuant to section 42A(5) of the Act.
[4] [2002] FCA 1366.
On the basis of the decisions in both Goldie and Katterns, the Tribunal accepts that the words “dismissed in error” in section 42A(10) are not to be read down in any way and can certainly extend to include a significant procedural error such as being denied prior notice of an intention to dismiss under section 42A(5). The words also extend to include a mistake of an applicant’s solicitor that has induced a dismissal of an application before the Tribunal.
In the present matter the applicant contends that he was denied notice that the Tribunal was considering dismissing the application prior to the decision to dismiss being made. The applicant contends that, consistent with the reasoning in Katterns, the Tribunal should consider such a failure an “error” for the purpose of section 42A(10) and reinstate the matter. More specifically, the applicant contends that despite the attempts by the Tribunal to make contact with the applicant’s lawyers in September and November 2020, the Tribunal did not in the course of those attempts provide notice to the applicant that the Tribunal was considering dismissing the application and that its failure to do so was a procedural error. The applicant contends that as a consequence of the Tribunal’s failure he was denied the opportunity to present submissions in favour of a decision not to dismiss the matter. The applicant contends that the matter was in fact being proceeded with at the time of the dismissal, noting that there had been correspondence between the parties at around that time in which the applicant’s lawyers had sought for the respondent to provide further documents in accordance with the section 38AA decision.
The respondent resists the application for reinstatement. The respondent contends that there is insufficient evidence before the Tribunal to support a conclusion that the applicant was denied notice or, in any event, that the Tribunal denied the applicant procedural fairness in any way. In this respect the respondent contends that there have been significant delays in the application as a consequence of the applicant’s conduct and that following the section 38AA decision the applicant has not taken sufficient steps to proceed with the application within a reasonable time. The respondent contends that in all of the circumstances the Tribunal acted reasonably and within its power in dismissing the matter as it did and that there has been no “error’ as is necessary to enliven the Tribunal’s power to reinstate the matter pursuant to section 42A(10) of the Act.
In support of the applicant’s contentions the applicant’s counsel tendered two affidavits of Peter Lucarelli dated 28 May 2021 and 16 July 2021 and an affidavit of Nicholas Bolton dated 16 July 2021. In support of the respondent’s case counsel for the respondent tendered two affidavits of Judith Birch dated 15 June 2021 and 13 August 2021.
The difficulty the Tribunal has with the applicant’s claim of being denied notice that a dismissal was being considered is that there is incomplete evidence before the Tribunal in relation to that matter and on which the Tribunal can be satisfied.
It is clear from the evidence that there were two attempts made by an employee of the Tribunal to call the applicant’s lawyers on 24 September 2020. The first of those calls was to Mr Andrew Emmerson who was a solicitor with carriage of the matter but there was no answer and no message was left. The second call was made to the applicant’s lawyer’s reception. The Tribunal’s records indicate that a voice message was left with an employee of the applicant’s lawyers however there is no detail in the evidence before the Tribunal of the content of any message left with the employee. In his affidavit of 16 July 2021 Mr Lucarelli maintains that the second call that was made on 24 September was most likely transferred through to the firm’s Sydney office as the Melbourne office was closed on that day due to public health restrictions in place as a consequence of the COVID-19 pandemic. Mr Lucarelli also maintains that there is no evidence of an employee having worked for the firm at the time with a name consistent with that noted in the Tribunal records. The Tribunal is satisfied that the call was made by an employee of the Tribunal to the firm’s reception but accepts Mr Lucarelli’s evidence that the call was transferred to the firm’s Sydney office for the reasons he states. The Tribunal cannot be satisfied as to the content of the voice message. There is simply insufficient evidence before it to do so.
The evidence also demonstrates that a further call was made by an employee of the Tribunal to the applicant’s lawyers on 9 November 2020. The Tribunal records note that a Tribunal employee made a call to the applicant’s lawyer’s reception and was then transferred through to Ms Natalie Lawler who was then a legal secretary working with the firm. Ms Lawler did not pick up the call but the Tribunal is satisfied on the basis of the Tribunal record that a voice message was left with Ms Lawler. Again, however, there is no evidence before the Tribunal on which it can be satisfied as to the content of the message. In addition to the 9 November 2020 phone call there is also evidence before the Tribunal that a follow up email was sent by an employee of the Tribunal again to Ms Lawler on the same day. The content of that email was as follows:
Could you please provide the Tribunal an update on the matter of Nicholas Bolton and ASIC. Has this matter finalised?
In his affidavit dated 16 July 2021 Mr Lucarelli confirmed that the email sent to Ms Lawler had been forwarded to him that evening although he had no actual recollection of receiving it and could not provide an explanation as to why it had not been actioned. It was also confirmed on behalf of the applicant through the applicant’s counsel that the email was not forwarded onto the applicant at the time and that the applicant only became aware of the Tribunal’s communication, and its subsequent dismissal order, on 24 February 2021. The Tribunal accepts this evidence.
The Tribunal accepts the applicant’s contention that the 9 November 2020 email does not include notice that the Tribunal was considering dismissing the application nor does it include a timeframe within which a response to the email should be provided.
The Tribunal accepts that a failure to put the applicant on notice that the Tribunal was considering the exercise of its power of dismissal pursuant to section 42A(5) in the event that no response to the email was provided, or not provided in a timely manner, prior to the power in that section being exercised would ordinarily constitute a procedural error sufficient to enliven the Tribunal’s power to reinstate under section 42A(10).[5] The Tribunal endorses the comments of Senior Member Cameron in Mitchell and Comcare in this respect where he states at [18]:
Procedural fairness is the fulcrum of any exercise of the discretion under section 42A(5)(a). It must be afforded to the applicant in those circumstances. This would ordinarily require the applicant to be given the opportunity by the Tribunal to make submissions as to why the discretion should not be exercised. Included in this process would be whether there had been a failure to proceed with the application, and if so, whether a reasonable time had elapsed since such failure. Similarly, to afford procedural fairness to the applicant in such circumstances, it would extend to giving them an opportunity to explain or justify any failure, or to advance any reasons why, despite such failure, the application should not be dismissed. [6]
[5] See for example Guse v Comcare [1997] FCA 1406 at 291 and also Katterns at [2]-[3].
[6] [2020] AATA 1464.
However, while the Tribunal accepts that the 9 November 2020 email does not of itself evidence notice to the applicant that the Tribunal was considering dismissing the application, for the reasons already set out, the Tribunal is not satisfied on the evidence before it that the Tribunal failed to provide such notice in the content of the voice messages that were left with the applicant’s lawyers on 24 September 2020 and 9 November 2020. Further, in the Tribunal’s view, the dismissal order itself clearly evidences a belief by the former Tribunal that the applicant had in fact been provided such notice. For these reasons, the Tribunal is not satisfied that there was a failure to provide notice to the applicant as claimed. Nor is the Tribunal satisfied that the former Tribunal made any other form of error in dismissing the matter pursuant to section 42A(5).
However, that is not the end of the matter.
It was confirmed through the applicant’s counsel that no response to the 9 November 2020 email was ever provided by the applicant’s lawyers. This is consistent with Mr Lucarelli’s evidence in his affidavit of 16 July 2021. It was also confirmed that the applicant’s lawyers did not forward on the Tribunal’s email to the applicant at any time prior to 24 February 2021. Nor did the applicant’s lawyers otherwise inform the applicant of the Tribunal’s concern regarding the status of the matter as expressed in the email before that date. The respondent did not seek to challenge this contention and the Tribunal accepts it as being accurate. In his affidavit Mr Lucarelli stated that he could not explain why it was that he had not provided a response to the email. There is also no explanation in the evidence as to why Mr Lucarelli failed to pass the email onto the applicant or otherwise advise the applicant of the Tribunal’s concerns. In the Tribunal’s view the only rational explanation for Mr Lucarelli’s failure to do so is that it was an administrative oversight. The Tribunal considers it implausible that Mr Lucarelli would fail to either respond to the email or pass it onto the applicant intentionally. It would appear to the Tribunal that the former Tribunal’s communications, and in particular the email of 9 November 2020, had simply slipped between the cracks.
Whatever the cause of that oversight there is no doubt in the mind of the Tribunal that it was significant in its effect. The Tribunal is satisfied that had the former Tribunal’s concerns regarding the status of the matter as expressed in the 9 November email been communicated to the applicant there is a real likelihood that the applicant would have sought to have his lawyers communicate to the Tribunal an intention to proceed with the matter. Further, had they done so in a timely manner, there is a real likelihood that the Tribunal would not have dismissed the matter under section 42A(5) as it did. The reason the Tribunal reaches this conclusion is that it is clear from the evidence that at the time of the dismissal the applicant was in fact seeking to progress the matter. This conclusion is supported by the correspondence between the parties in October 2020. This of course was unknown to the former Tribunal. In addition, while there is some time gap between when the applicant first became aware of the dismissal in February 2021, and the time he lodged the present application to reinstate the matter in April 2021, the Tribunal accepts, as was contended by the applicant’s counsel, that the delay was explainable by the fact that there had been some without prejudice discussions between the parties in that intervening period.
The Tribunal is satisfied that the oversight by the applicant’s lawyers is a mistake of a kind that falls within the meaning of “error” for the purpose of section 42A(10) consistent with the reasoning in Goldie. More specifically, the Tribunal is satisfied that the error, in effect, induced the dismissal.
For these reasons, the Tribunal is satisfied that the applicant’s lawyers’ oversight constitutes an error for the purpose of section 42A(10) of the Act and that the Tribunal’s power to order reinstatement is enlivened.
The Tribunal now turns to the consideration of the exercise of the discretion.
The first consideration the Tribunal has had regard to is that the power in section 42A(5) of the Act to summarily dismiss an application and thereby deny an applicant the opportunity to have their case considered by the Tribunal at a full hearing is a serious step and one that should only be taken sparingly and as a matter of last resort.[7] In this context, the Tribunal has had particular regard to the fact that this matter is already part heard, that the dismissal of the application was due to an oversight by the applicant’s lawyers and that at the time of the dismissal the applicant was seeking to progress the matter. In the Tribunal’s view these considerations weigh very significantly in favour of reinstatement of the application.
[7] See Guse v Comcare and also Charara v Federal Commissioner of Taxation (2016) 69 AAR 97.
In opposing reinstatement, the respondent has placed significant weight on the history of delays in getting the matter to final hearing that it claims have been caused by the applicant. The procedural steps are set out in some detail in the submissions as well as the affidavit material including in particular the affidavits of Ms Birch. There is no need to repeat the detail of the procedural history here. In her affidavits, Ms Birch makes a number of claims as to the cause of delays in the proceeding that are adverse to the applicant. In his affidavit affirmed on 16 July 2021 the applicant responds to those claims. It is also not necessary for present purposes for the Tribunal to make specific findings regarding relative responsibility of the parties for the various delays in progressing the matter. There is certainly no question that the matter has been accompanied with significant delay having been first commenced in 2015 and set down for final hearing on no less than 7 occasions. The Tribunal also accepts, based on its high level assessment of the procedural history, that the applicant’s conduct of the matter has been a significant contributing factor in many of the delays that have occurred, although the respondent is also vulnerable to some criticism in that respect. However, the fact is that notwithstanding significant initial delays the matter reached the point of final hearing and, in the Tribunal’s view, responsibility for the circumstances that have led to delays from that point onwards can be fairly shared between the parties.
The Tribunal is satisfied that both parties raised procedural issues at the final hearing and sought at various points to adjourn the matter. It is certainly true that following the Tribunal’s section 38AA decision in November 2018 the matter was effectively in abeyance for some time and the applicant must take primary responsibility for that. However, as has already been acknowledged, the Tribunal accepts that at the time of the dismissal there were some outstanding actions required by the section 38AA decision that had not been performed by the respondent. Those actions required the production of additional documents for the purpose of the final hearing and those documents have yet to be produced.
The Tribunal is satisfied that both parties must bear some responsibility for the ongoing delays following the commencement of the final hearing. However, of more significance in the view of the Tribunal is the fact that at the time of the dismissal the applicant was taking steps to progress the matter. That is evidenced by the correspondence between the parties in October 2020. In addition, the Tribunal is satisfied that the applicant remains willing to proceed with the application. For these reasons, while the Tribunal accepts that there is a significant history of delays in progressing the matter neither party is completely blameless in that regard. In all of the circumstances the Tribunal is not satisfied that this consideration of itself would justify a decision to not reinstate the application.
The respondent has also placed significant weight on the risk of further ongoing delays due to concerns about the applicant’s capacity to fund the application through to the completion of the hearing. In raising this issue the respondent claims that a significant number of adjournments and other procedural delays that occurred leading up to the commencement of the final hearing in March 2018 were due to funding issues of the applicant. The respondent contends that those funding issues are still present and that therefore the Tribunal can have no confidence there will not be further delays. The respondent notes in particular that it has not yet received any costs awarded against the applicant in respect of a related Federal Court proceeding that was subsequently discontinued and notes that its own ongoing costs in the matter are substantial.
The Tribunal accepts that funding issues appear to have been a significant contributing factor in a number of the previous aborted hearings. The Tribunal also maintains concern regarding the applicant’s ongoing funding capacity although it notes the representations by counsel at the interlocutory hearing that the applicant is in a position to fund the proceeding. Notwithstanding its residual concern in this respect, the Tribunal is not satisfied on the basis of the evidence before it that the applicant currently lacks a financial capacity to progress the matter, noting in particular that he has, since the expiration of his period of disqualification, recommenced his work as a director of a number of companies. In addition, 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.
The respondent also contends that the Tribunal should not exercise its discretion in favour of reinstatement due to what it describes as the relatively poor prospects of success in the final hearing. In pressing this contention the respondent claims that the purpose of the application has shifted from the time of its commencement. The respondent argues that given that the disqualification period has now been completed the only residual value in proceeding with the matter is to have the disqualification overturned in its entirety and that the prospects of this occurring in all of the circumstances are very low. The respondent contends that the applicant is seeking that outcome both for the purpose of removing the reputational stain associated with the disqualification but also to have the benefit of a costs indemnity purportedly offered to the applicant on behalf of Keybridge Capital but which would only crystalise in the event that he is successful in his application. The applicant maintains that his prospects of success in overturning the disqualification decision are good. Further, the applicant contends that given the very significant personal reputational damage he has suffered as a consequence of the ongoing stain of the disqualification, and the practical adverse consequences that can flow from that damage, he should not be denied the opportunity to complete his case before the Tribunal.
The Tribunal is not inclined to say too much about the prospects of success in this matter. The Tribunal acknowledges that there are genuine matters in dispute, that the matter is already part heard, and that central to the issues in the substantive matter is a consideration by the Tribunal as to whether it is satisfied that disqualification of the applicant as a director was justified in all of the circumstances of the case. In addition, the Tribunal accepts that the applicant retains a legitimate interest in seeking to overturn the disqualification for the reasons he asserts in his affidavit. In the Tribunal’s view, the nature of the issues before it are of a type that are most appropriately determined at a properly ventilated final hearing of the application where both parties are afforded an opportunity to present their best case together with all relevant evidence. In these circumstances the Tribunal is not satisfied that the prospects of success consideration should weigh significantly against a decision to reinstate the matter.
The respondent also contends that in the event that the Tribunal grants the reinstatement the respondent will suffer prejudice in relation to its answering of the substantive matter in a number of different respects. The respondent contends that the liquidators called to give evidence at the final hearing may need to depose further affidavits in response to any further issues raised by the applicant and also either give or complete their evidence to the Tribunal. The respondent contends that the liquidators would be required to give evidence of matters that occurred 8 to 10 years ago or even longer and may have greater difficulty recalling relevant events as a consequence of the passage of time. The respondent contends that this is unfair to the liquidators and prejudicial to the respondent. The respondent contends that it is incumbent on the respondent to present persuasive evidence to satisfy the Tribunal that the disqualification is justified and that therefore the prejudice the parties might suffer as a consequence of the passage of time would not be borne equally by the parties.
The respondent also contends that it is disadvantaged by the retirement of former Deputy President Forgie who, due to her retirement, will no longer be in a position to complete the hearing and that the hearing will therefore need to be completed before a Member who did not have the benefit of hearing directly the evidence that has already been given. The respondent also contends that it is possible that the applicant will require the production of further documents that may now be unavailable due to the passage of time and that counsel on behalf of the applicant may seek to draw inferences from the absence of such documentation.
The Tribunal accepts that a reinstatement of the matter will cause some prejudice to the respondent due to passage of time both in terms of the memory recall of witnesses and also potentially in relation to the availability of further documentation although that latter point is at least somewhat speculative. That prejudice is, of course, not exclusive to the respondent. The Tribunal also acknowledges the unfortunate circumstances where the Member who commenced the hearing will not be available to conclude the hearing. Such a circumstance while undesirable is certainly not unique and the Tribunal is satisfied that it can be effectively managed.
However, while acknowledging the potential for some prejudice to the respondent as a consequence of the passage of time, in the Tribunal’s view it is substantially outweighed by the prejudice the applicant would certainly suffer in the event the Tribunal decided not to reinstate the matter. As already noted, a decision to exercise the discretion against reinstatement would cause the applicant to be denied the opportunity to complete his case and have the application considered in its entirety. It is difficult to conceive of greater prejudice than that.
For these reasons and having weighed each of the considerations presented by the parties in respect of the Tribunal’s discretion both individually and also in combination, on balance the Tribunal is satisfied that it is appropriate to grant the application.
The Tribunal feels compelled to express its concern regarding the length of time taken to finalise this matter. While the Tribunal accepts that the issues in dispute are complex and some of the delay has been due to factors outside of the parties’ control, the manner in which the proceedings have been conducted to date have certainly contributed to the delay to some degree. Neither party is completely blameless in this respect. The Tribunal reiterates its expectation that each of the parties will maintain a genuine commitment to the objective of finalising the matter as expeditiously as possible. A directions hearing will be listed shortly to consider next steps.
Decision
The application is reinstated pursuant to section 42A(10) of the Act.
I certify that the preceding 50 (fifty) paragraphs are a true copy of the reasons for the decision herein of The Hon. Matthew Groom, Senior Member
...................[SGD].....................................................
Associate
Dated: 22 October 2021
Date(s) of hearing: 7 October 2021 Counsel for the Applicant: Mr A. Broadfoot QC and Mr L. Molesworth Counsel for the Respondent: Dr P. Bender and Dr. A Hoel
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