Bringans and Australian Securities and Investments Commission

[2023] AATA 3096

Bringans and Australian Securities and Investments Commission [2023] AATA 3096 (5 July 2023)

Division:TAXATION AND COMMERCIAL DIVISION

File Number(s):      2022/5410

Re:Mark Bringans

APPLICANT

AndAustralian Securities and Investments Commission

RESPONDENT

File Number(s):2022/6104      

Re:Oscar Pecyna  

APPLICANT

AndAustralian Securities and Investments Commission

RESPONDENT

File Number(s):2022/6158      

Re:Jonathan Richard Schneider  

APPLICANT

AndAustralian Securities and Investments Commission

RESPONDENT

DECISION

Tribunal:Deputy President Bernard J McCabe

Date:5 July 2023

Place:Sydney

1. Mr Pecyna will provide a draft statement of agreed facts to the other applicants forthwith.

2. The applicants will confer on the draft with a view to agreeing on the text of a single document that is to be provided to ASIC by 18 July 2023.

3. If the parties cannot agree on a single draft statement of agreed facts by 18 July 2023, each party may provide their own draft to ASIC by 18 July 2023.

4. ASIC will provide to the Tribunal a final statement of agreed facts that has been negotiated with the applicants after such consultations with the applicants as may be appropriate or advise the Tribunal that there was no agreement by 1 August 2023.

5. ASIC should submit proposed timetabling directions in accordance with these reasons by 1 August 2023 or, if the parties cannot agree on timetabling directions, each party shall file with the Tribunal their proposed directions on that date in advance of a case management directions hearing to be held at a time convenient to the Tribunal and the parties.

.........................[SGD]...............................................

Deputy President Bernard J McCabe

CATCHWORDS

Practice and procedure - order of filing of evidence - three applicants from the same business - whether agreed statement of facts beneficial

LEGISLATION

Administrative Appeals Tribunal Act 1975 (Cth)

Corporations Act 2001 (Cth)

SECONDARY MATERIALS

Review of Taxation and Commercial Decisions Practice Direction 2015

REASONS FOR DECISION

Deputy President Bernard J McCabe

5 July 2023

1. These reasons explain the case management directions I am making in three sets of proceedings which are (for now, at least) being managed together. The proceedings in each case arise out of banning decisions made by the Australian Securities and Investments Commission (ASIC) under ss 920A and 920B of the Corporations Act 2001 (Cth) against the individual applicants. The applicants were all participants in the same business. ASIC and the applicants have disagreed over the utility of negotiating a common statement of agreed facts. They also disagree about the order in which the parties should file evidence to that extent that is required. I heard from all of them in relation to these issues at a case management directions hearing on 20 June 2023 but it became apparent it would be necessary for me to engage with the detail of the statements of facts, issues and contentions (the SFIC) that were filed in each case by ASIC before I could reach a concluded view on “the case management strategy that will be most effective to achieve early resolution of the application by way of agreement between the parties or by the AAT making a decision”: see [4.3], Review of Taxation and Commercial Decisions Practice Direction 2015 (the Practice Direction).

2. ASIC has already fulfilled its obligations in each case by filing documents under s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act). The multi-volume bundles include supplementary documents. ASIC has also filed a SFIC in each case, and the applicants have each filed their own SFIC in reply. The applicants’ SFICs took longer to file than anticipated: each of the parties was given several extensions of time. The third applicant, Mr Bringans, filed his SFIC after the most recent directions hearing after belatedly seeking a further extension.

3. One of the applicants, Mr Pecyna, also filed a draft statement of agreed facts. It had been agreed at the last directions hearing that Mr Pecyna would provide such a draft to the Tribunal and ASIC. An agreed statement of facts has the potential to simplify the fact-finding task for the Tribunal, and it may reduce the costs for the parties as they prepare for the hearing. Experience shows those benefits are often illusory, and the time and effort devoted to wrangling over a draft statement might be better directed towards preparing the case in more conventional ways. For better or worse, I agreed at the previous directions hearing that Mr Pecyna should be given the opportunity to try to produce a draft statement. The direction was made on the assumption the draft statement would be prepared relatively quickly. I assumed (although the direction did not expressly provide for this) the draft would be shared with the other two applicants so we would soon know whether this was a viable option. The draft took longer to produce than originally anticipated and the other two applicants were not provided with the draft in advance of them sharing their SFICs. As I understand it, Mr Pecyna wanted the other applicants to put on their SFIC before they had the advantage of seeing the draft statement.

4. Now that SFICs have all been exchanged, Mr Mitchell, counsel for Mr Pecyna, argued all four parties should confer with a view to exchanging marked-up versions of the draft statement of facts by 11 July. Mr O’Mahoney, counsel for Mr Schneider, agreed with this course. Mr Shakenovsky, who appeared for Mr Bringans, was less enthusiastic but (I infer) not expressly opposed to this course.

5. ASIC’s counsel, Dr Bender, says the delays so far demonstrate why the whole process is misconceived. He says the applicants should instead get on with preparing their individual cases and lodge their evidence in a timely way. On that approach, ASIC would then file its evidence in each case. He said he did not anticipate ASIC would be filing much additional evidence as they anticipate most of the material they would require is contained in the s 37 documents. He said that was fair and appropriate since ASIC’s SFIC in each case has detailed the relevant evidence it intended relying upon, which was already contained within the documents provided pursuant to s 37 of the AAT Act. Dr Bender also foreshadowed ASIC seeking leave to file amended SFICs once the applicants’ material had been filed and reviewed.

6. The applicants say that, if the parties are to file evidence, ASIC should go first in each case. They point out ASIC went first with its SFICs – which is common enough in regulatory cases – and it makes sense to stick with that order once the time comes to file evidence (assuming evidence is still required because the draft statement of facts did not obviate the need to provide additional material). They also say ASIC should file its amended SFICs now so the applicants can properly engage with ASIC’s case. They argue allowing ASIC to file an amended SFIC later will just necessitate a further round of amended SFICs and evidence.

A statement of agreed facts

1. It is undoubtedly possible for the parties to agree on many of the facts which might otherwise have to be formally established by evidence. All the parties are obliged to use their best endeavours to assist the Tribunal to achieve the objective referred to in s 2A of the AAT Act: see s 33(1AB). The decision-maker is under a specific obligation to assist me to reach the correct or preferable outcome: s 33(1AA). All the parties would be in breach of their obligations if they fail to readily agree on facts which are obviously uncontentious.

2. Areas of agreement should be made clear at the earliest opportunity to sharpen the focus of the proceedings. That requirement is made clear in the Tribunal’s Practice Direction, which provides (at [2.4]):

   We expect you and the decision-maker to cooperate with us and with each other to:

   (a) identify the real issues in dispute early; and

   (b) deal with those issues efficiently and effectively.

3. The SFIC is the obvious place to make formal concessions or admissions, but those admissions might come later in the process after material is filed and issues regarding disputes on questions of fact fall away.

4. In some cases, the parties may be able to formally agree on a common statement of facts which (at least in theory) simplifies the fact-finding process. It will be a matter for judgment in each case as to whether it is worth pursuing that option. As I have already explained, I acceded to Mr Pecyna’s earlier request that he be given the opportunity to prepare a draft. I also explained the process has taken longer than anticipated. ASIC’s opposition to this course after reviewing the SFICs provided by two of the applicants does not bode well. Now that Mr Pecyna has done the work, it would be wasteful if the parties did not at least attempt to see the process through to completion. Even if the parties cannot agree on a comprehensive statement, it is possible that some of the questions of fact that are common to the three cases might be resolved.

5. To that end, I agree the three applicants should confer on the draft prepared by Mr Pecyna. His draft should be provided to the other applicants forthwith. If they can agree a single marked-up version of the document between them, they can communicate that version to ASIC by 18 July 2023. If they cannot agree on a single version, they can communicate individual marked-up versions to ASIC by the same date. If any of the applicants does not wish to do so, they may indicate as much in writing to the Tribunal and ASIC by 18 July 2023. ASIC will then have 14 days to consider its attitude to the document(s). That attitude might be informed by further negotiations which occur within that period. In any event, ASIC should report back to the applicants and the Tribunal at the end of that period to explain what, if anything, can be agreed.

Preparing Evidence

1. All of the parties should be preparing their evidence. ASIC has presumably gone a long way down that road given it made a reviewable decision in each case, and it has now prepared SFICs. It also has an overview of the entirety of the facts which are relevant to the proceedings: it might have a clearer view of what occurred from its vantage point than the individual applicants. Having said that, the applicants know what happened to them, and they know what they did and how they reacted. So who should go first?

2. It often makes sense for the regulator to go first in a review. While the reviewable decision presumably provides a sense of the regulator’s case, the regulator is not inevitably bound by the reasons it gave or the factual findings it made in the reviewable decision. The Tribunal’s review forms part of a decision-making continuum. The regulator’s position might evolve as the review progresses. It is helpful for the regulator to put the details of any evolution on the record so we can focus the proceedings.

3. The regulator has already led the way by filing a SFIC in each of the cases before me. The applicants have each provided a SFIC. The applicants all say that, subject to the outcome of discussions about an agreed statement of facts, it makes sense for ASIC to file its evidence – or to at least provide a more detailed roadmap (perhaps in an amended statement of facts, issues and contentions) identifying the material contained in the documents filed pursuant to s 37 of the AAT Act upon which ASIC intends relying at the hearing.

4. I indicated to the parties that I would decide the question of who should go first with evidence after having regard to the SFICs that ASIC filed in respect of each applicant. Dr Bender said each of those statements contain ample references to the material relied upon.

5. ASIC’s SFICs are extensive. The allegations of fact in each case – many of which are presumably uncontested – appear to be carefully footnoted with reference to the material that has already been filed. In each case, ASIC records the delegates of findings and points out it will also press arguments that each of the applicants were involved in the contraventions of other persons. ASIC also alleged Mr Pecyna was likely to be involved in the contraventions of another person. While ASIC has foreshadowed its case on review might be broader than the delegate decision, it has given enough of a roadmap in the SFICs to assist the applicants to understand where it is going.

6. I am conscious ASIC will have more of an incentive to engage with the applicants in relation to the draft agreed statement of facts if it were obliged to file its material first, but two things can be said about that:

   (a)ASIC is under a statutory obligation (and an obligation as a model litigant) to constructively participate in those discussions; and

   (b)ASIC has made clear that it does not anticipate filing a substantial amount of additional material in any event because most of it is contained within the documents that it has already filed.

7. In circumstances where ASIC has signalled its case and outlined the evidence on which it relies in reasonable detail, the next and most logical steps is for the applicants to provide their material in reply. It may be the extent of material to be filed will be limited as a consequence of discussions about an agreed statement of facts, but in any event they need to take the next step.

8. I have already explained I will permit the discussion over an agreed statement of facts to play out. But each applicant should confer with ASIC about how long it needs to file its material after the discussions over the draft agreed statement of fact have concluded. If timetabling directions can be made by consent, they should be submitted to the Tribunal at the same time ASIC indicates its attitude to the draft agreed statement of facts. If the applicant and ASIC cannot agree in a given case, each party can file their own proposed timetable. Timetabling directions might follow without more, but if necessary, the Tribunal will convene a directions hearing to resolve any dispute about timetable.

9. I will not make directions for ASIC to file amended SFIC at this point.

10. The parties in each case should also turn their minds to (a) the desirability of alternative dispute resolution event, even if the focus of those events was on case management issues that might be resolved ahead of the hearing; and (b) the timing of the hearing or hearings – which requires the parties to focus on whether the matters should be heard together, or consecutively, or if one might usefully go first as a lead. If hearing dates can be suggested, they can be allocated.

I certify that the preceding 21 (twenty -one) paragraphs are a true copy of the reasons for the decision herein of Deputy President Bernard J McCabe

.......................[SGD].................................................

Associate

Dated: 5 July 2023

Date(s) of hearing:	20 June 2023
Solicitors for the Mark Bringans:	Kennedy's Law
Counsel for the Oscar Pecyna:	Mr D Mitchell
Solicitors for the Oscar Pecyna:	Hamilton Locke
Counsel for the Jonathon Richard Schneider:	Mr G O'Mahoney
Solicitors for Jonathon Richard Schneider	Clyde & Co
Counsel for the Respondent:	Dr P Bender with Mr G Jegatheesan