Budd and Australian Securities & Investments Commission

[2024] AATA 112

Budd and Australian Securities & Investments Commission [2024] AATA 112 (30 January 2024)

Division:                TAXATION AND COMMERCIAL DIVISION

File Number(s):     2023/7961          

Re:Christopher Budd

APPLICANT

AndAustralian Securities & Investments Commission

RESPONDENT

DECISION

Tribunal:Member W Frost

Date of decision:               30 January 2024

Date of written reasons:      2 February 2024

Place:Canberra

The Tribunal dismisses the application pursuant to subsection 42A(4) of the Administrative Appeals Tribunal Act 1975.

….[SGD]........................................................
Member W Frost

Catchwords

INTERLOCUTORY APPLICATION – Jurisdiction question – Australian Securities and Investments Commission – Corporations Act (2001) – reviewable decision – jurisdiction of the Tribunal – no jurisdiction to review – application dismissed pursuant to section 42A(4) of the AAT Act

Legislation

Administrative Appeals Tribunal Act (1975) (Cth) ss 3, 25,42A, 42B
Corporations Act (2001) (Cth) ss 58AA, 118, 119, 205B, 206A, 206B, 206C, 206D, 206E, 1274, 1274AA, 1317A, 1317B, 1317C, 1322

Cases
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321Birdseye and ASIC [2003] AATA 138
CPAC Residential Pty Ltd and Australian Securities and Investments Commission [2016] AATA 428
Director-General of Social Services v Chaney (1980) 31 ALR 571
Lees v Comcare (1999) 56 ALD 84
Miltonbrook Pty Ltd v Westbury Holdings Kiama Pty Ltd [2008] NSWCA 38

Secondary Materials
Administrative Decisions (Judicial Review) Act 1977
Dennis Pearce, Administrative Appeals Tribunal (LexisNexis Butterworths, 4^th ed, 2015)

REASONS FOR DECISION

Member W Frost

2 February 2024

INTRODUCTION

1. The Applicant, Mr Christopher Budd, applied to the Administrative Appeals Tribunal (Tribunal) for review of four purported decisions made by the Australian Securities & Investments Commission (ASIC) in relation to a company called DSJB Group Pty Ltd ACN 655 897 359 (DSJB Group) and its director, Mr Daniel Truman Brown.

2. The preliminary issue before the Tribunal was whether it had jurisdiction to review ASIC’s purported decisions the subject of the Applicant’s application. Following directions made by the Tribunal and the Tribunal subsequently held an interlocutory hearing. The Tribunal considered all submissions made by the parties.

3. At the interlocutory hearing, the Tribunal dismissed the Applicant’s application pursuant to subsection 42A(4) of the Administrative Appeals Tribunal Act 1975 (AAT Act), because it was satisfied that the purported decisions were not reviewable. The Tribunal read out short reasons for its decision. Following receipt of the decision, the Applicant requested a statement of the Tribunal’s written reasons. These are those written reasons for the dismissal of the application.

   ISSUE

4. The issue for the Tribunal was whether it had jurisdiction to review the application made by the Applicant.

   BACKGROUND

5. On 7 December 2021, DSJB Group was registered as a company by ASIC. From that date, Mr Brown was one of two directors of DSJB Group, however the second director ceased to be an officeholder in December 2022.

6. On 17 February 2023, an external administrator was appointed to DSJB Group pursuant to an order made by the Federal Court of Australia.

7. On 29 October 2023, the Applicant applied to the Tribunal for review of four purported decisions of ASIC in relation to DSJB Group and Mr Brown’s appointment as a director of that company.

   LEGISLATION

   AAT Act

8. Section 3 of the AAT Act provides that:

   (3) Unless the contrary intention appears, a reference in this Act to a decision includes a reference to:

   (a) making, suspending, revoking or refusing to make an order or determination;

   (b) giving, suspending, revoking or refusing to give a certificate, direction, approval, consent or permission;

   (c) issuing, suspending, revoking or refusing to issue a licence, authority or other instrument;

   (d) imposing a condition or restriction;

   (e) making a declaration, demand or requirement;

   (f) retaining, or refusing to deliver up, an article; or

   (g) doing or refusing to do any other act or thing.

9. Section 25 of the AAT Act relevantly states that:

   (1) An enactment may provide that applications may be made to the Tribunal:

   (a) for review of decisions made in the exercise of powers conferred by that enactment…

10. The Tribunal has no general power or jurisdiction to review decisions. The effect of subsection 25(1) of the AAT Act is that the Tribunal can only review decisions if an ‘enactment’, relevantly being an Act of Parliament or an instrument (including rules, regulations or by-laws) made under an Act, specifically provides the Tribunal with jurisdiction. This is for the purpose of reviewing a reviewable decision, it is not given powers that may be exercised at large: Lees v Comcare (1999) 56 ALD 84 at [39]. In determining jurisdiction, the Tribunal must relevantly consider whether an enactment confers it with jurisdiction.[1]

    [1] Pearce, D., Administrative Appeals Tribunal, 4^th edition, LexisNexis Butterworths, 2015, p. 20.

11. Subsection 42A(4) of the AAT Act provides that the Tribunal may dismiss an application without proceeding to review the decision if the Tribunal is satisfied that the decision is not reviewable by the Tribunal.

    Corporations Act

12. Part 9.4A of the Corporations Act 2001 (Corporations Act) provides for the Tribunal to review certain decisions made under that legislation. In this Part of the Corporations Act, ‘decision’ has the same meaning as in the AAT Act, referred to above in these reasons.

13. Section 1317B of the Corporations Act relevantly states that:

    Subject to this Part, applications may be made to the Tribunal for review of a decision made under this Act by:

    …

    (b) ASIC…

14. However, section 1317C of the Corporations Act sets out those decisions to which section 1317B does not apply and which are therefore decisions excluded from review by the Tribunal. Most relevantly, section 1317C of the Corporations Act provides that:

    Section 1317B does not apply in relation to:

    (a) a decision in respect of which any provision in the nature of an appeal or review is expressly provided by this Act; or

    (b) a decision that is declared by this Act to be conclusive or final or is embodied in a document declared by this Act to be conclusive evidence of an act, matter or thing…

    CONSIDERATION

    ASIC’s purported decisions

15. The Applicant sought review by the Tribunal of the following four purported decisions:

    (a)ASIC’s decision not to give effect to Mr Brown’s automatic disqualification from managing corporations;

    (b)ASIC’s decision to register DSJB Group as a company;

    (c)ASIC’s decision to appoint Mr Brown as a director of DSJB Group; and

    (d)ASIC’s decision not to remove Mr Brown as a director of DSJB Group.

    (a) ASIC’s decision not to ‘give effect’ to Mr Brown’s automatic disqualification

16. It was common ground that Mr Brown was automatically disqualified from managing corporations at the relevant time pursuant to section 206B of the Corporations Act, regarding disqualification due to being convicted of certain offences.

17. The Tribunal notes that there is no legislative obligation on ASIC to ‘give effect’ to a director’s automatic disqualification from managing corporations. The automatic disqualification of a person from managing corporations under section 206B of the Corporations Act is independent of ASIC or any of its processes. This is distinct from the subsequent provisions, being sections 206C, 206D and 206E of the Corporations Act, pursuant to which a Court may, upon application by ASIC, disqualify a person from managing corporations for various other reasons.

18. Subsection 206A(2) of the Corporations Act relevantly provides that a person ceases to be a director of a company if they become disqualified from managing corporations. The Note to that provision states that if a person ceases to be a director under subsection (2), the company must notify ASIC. Pursuant to subsection 205B(5) of the Corporations Act, if a person stops being a director, the company must lodge with ASIC notice in the prescribed form within 28 days. A failure to comply with this obligation is an offence in accordance with subsection 205B(7) of the Corporations Act.

19. That is, the reporting obligation falls to the company. In this regard, the obligation to ensure the accuracy of a company’s details also falls to the company and, by extension, its director or directors, not to ASIC. There is no obligation on ASIC to conduct its own review as to the accuracy of its registers in relation to entries regarding particular companies.

20. To this end, and in contrast with the automatic disqualification provision of section 206B of the Corporations Act, subsection 1274AA of the Corporations Act requires ASIC to keep a register of persons who have been disqualified from managing corporations under, for example, the aforementioned sections 206C, 206D and 206E of the Corporations Act.

21. Accordingly, the Tribunal is satisfied that there was no ‘decision’ not to ‘give effect’ to Mr Brown’s automatic disqualification from managing corporations, because there was no legislative requirement to do so. ASIC was not required under any legislative provision to ‘give effect’ to any automatic disqualification of Mr Brown under the Corporations Act.

    (b) ASIC’s decision to register DSJB Group as a company

22. ASIC does not have power to create a company. It has legislative power to ‘register’ a company pursuant to section 118 of the Corporations Act if it has received an application to do so. Under section 118, ASIC may give the company an ACN, register the company, issue a certificate with the company’s details, and must keep a record of the registration.

23. Under section 119 of the Corporations Act, a company ‘comes into existence as a body corporate at the beginning of the day on which it is registered’. This is, as ASIC submitted, a legislative process, not involving a decision of ASIC under the Corporations Act as to when the company begins its life. It is therefore misconceived to say that ASIC created DSJB Group.

24. Additionally, subsection 1322(4) of the Corporations Act provides that a Court may, on application by an interested person, make certain orders, either unconditionally or subject to such conditions as the Court imposes, including making an order directing the rectification of any register kept by ASIC under the Corporations Act. Such a power is not provided to the Tribunal; it is expressly within the jurisdiction of the Court and section 1317C of the Corporations Act therefore operates to exclude the Tribunal’s jurisdiction in relation to ASIC’s registers.[2]

    [2] See CPAC Residential Pty Ltd and Australian Securities and Investments Commission [2016] AATA 428 at [15].

25. The Tribunal also notes that, in accordance with Miltonbrook Pty Ltd v Westbury Holdings Kiama Pty Ltd [2008] NSWCA 38 at [60], the power to rectify the register of companies under subsection 1322(4)(b) of the Corporations Act ‘extends to removing a company from the register where the process by which the company was placed on the register was invalid’. Again, the power to order rectification lies with the Court, not the Tribunal.

    (c) ASIC’s decision to appoint Mr Brown as a director of DSJB Group

26. In line with much of the above discussion regarding the registration of DSJB Group, ASIC did not appoint Mr Brown as a director of DSJB Group. That was plainly a matter undertaken by the company, not ASIC. 

27. ASIC registered Mr Brown as a director of DSJB Group pursuant to an application made to ASIC by DSJB Group. There was no decision made by ASIC in the relevant sense to enliven the Tribunal’s jurisdiction.

    (d) ASIC’s decision not to remove Mr Brown as a director of DSJB Group

28. As set out above, the disqualification of Mr Brown as a director of DSJB was automatic under section 206B of the Corporations Act by reason of his conviction for certain offences. There was no decision of ASIC not to remove Mr Brown as a director of DSJB Group. The onus was on DSJB Group to notify ASIC of Mr Brown’s disqualification and any failure to do so is an offence. As set out above, the Court, and not the Tribunal, has jurisdiction to order the rectification of a register maintained by ASIC.

    The purported decisions are not ‘decisions’ capable of review

29. Having regard to the above, the Tribunal is satisfied that all four of the purported decisions of ASIC are not decisions capable of being reviewed by the Tribunal in accordance with section 1317B of the Corporations Act.

30. Section 1317A of the Corporations Act provides that the meaning of ‘decision’ for the purposes of a review under the Corporations Act is the same as the meaning of decision in the AAT Act.

31. In Director-General of Social Services v Chaney (1980) 31 ALR 571 (Chaney), Deane J explained (in the context of construing a separate provision) that an element of finality or operative determination must be present before a decision is reviewable by the Tribunal. At 591, his Honour said:

    Section 3(3) of the Act defines a reference in the Act to a “decision” as including a reference to a litany of activities of both a positive and negative nature culminating in “doing or refusing to do any other act or thing”. The provisions of s 3(3) would seem more apposite to define a reference to the substantive “decision” of the original decision maker than to confine the scope of a reference to a “decision” of the Tribunal upon review. Subject to that qualification, the specific activities mentioned in the definition in s 3(3), which are in the nature of effective action rather than intermediate “decision” on the path to such action, provide some indication that a reference to “decision” in the Act is, prima facie, a reference to the ultimate or operative determination rather than a reference to an adjudication or determination of issues arising in the course of making such an ultimate or operative determination.

32. The meaning of a ‘decision’ was further considered by the High Court of Australia in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, in the context of the Administrative Decisions (Judicial Review) Act 1977, which expressed the following principles:[3]

    …the reference in the definition in s. 3(1) to “a decision of an administrative character made...under an enactment” indicates that a reviewable decision is a decision which a statute requires or authorizes rather than merely a step taken in the course of reasoning on the way to the making of the ultimate decision.

    …

    …a reviewable “decision” is one for which provision is made by or under a statute. That will generally, but not always, entail a decision which is final or operative and determinative, at least in a practical sense, of the issue of fact falling for consideration. A conclusion reached as a step along the way in a course of reasoning leading to an ultimate decision would not ordinarily amount to a reviewable decision, unless the statute provided for the making of a finding or ruling on that point so that the decision, though an intermediate decision, might accurately be described as a decision under an enactment.

    Another essential quality of a reviewable decision is that it be a substantive determination.

    [3] (1990) 170 CLR 321 at 336-337. See also, for example, Birdseye and ASIC [2003] AATA 138 at [27]-[32].

33. As a differently constituted Tribunal found in CPAC Residential Pty Ltd and Australian Securities and Investments Commission [2016] AATA 428 (CPAC) at [12]-[13], the making of an entry by ASIC on one of its registers was not a ‘decision’ capable of review by the Tribunal. The Tribunal in CPAC noted Counsel for ASIC’s submission that:

    ASIC’s conduct in this case did not involve a decision in the sense discussed in Bond, even if the conduct appeared to answer the statutory description of ‘doing or refusing to do any act or thing’. Dr Bender went on to refer to the Tribunal’s decision in Re Gallivan Investments and Australian Securities Commission (1991) 24 ALD 611 to argue ASIC’s conduct in accepting the form and making entries on the register cannot be seen in isolation from the larger administrative process. To use the language of Deputy President McMahon in Gallivan, accepting the form and making an entry on the register “is more in the nature of a step of an administrative nature, not in itself determinative, but leading towards a final resolution of the controversy between the parties”: at 615. That is a problem, as DP McMahon explained (at p 614) because:

    …unless the Commission’s decision can be regarded as the ultimate or operative decision determining the substantial issues between the parties, it cannot be regarded as a reviewable decision…

    ASIC is right. ASIC discharged an administrative function when it accepted the form and recorded the information on a register. It was a step in a process that did not require the exercise of judgment or discretion. The substantive dispute lies elsewhere – in relation to the validity of the appointment, most obviously. But that appointment was not made by ASIC, and the substantive remedy in the event of an irregularity lies with the Court, not the Tribunal.

34. While the facts in CPAC were different to those in the present proceeding, the findings in relation to the Tribunal’s jurisdiction are directly applicable in this matter. The Tribunal finds that ASIC’s action in recording DSJB Group in its register of companies, and Mr Brown as its director, was a purely administrative function. Similarly, the Tribunal is satisfied that ASIC’s ‘decision’ not to remove Mr Brown as a director of DSJB Group, or some other unspecified action to ‘give effect’ to his disqualification from managing corporations, is the performance (or non-performance) of a purely administrative function. That is, there is no sense in which the purported decisions have the requisite degree of finality or require the exercise of judgment or discretion.

    The decisions are excluded from review

35. Even if the purported decisions were ‘decisions’ in the requisite sense and therefore open to review by the Tribunal under section 1317B of the Corporations Act, they are decisions that are expressly excluded from Tribunal review by section 1317C of the Corporations Act. That is, a Court, and not the Tribunal, is the proper forum for any appeal or review in this matter.[4]

    [4] ‘Court’ is defined in section 58AA of the Corporations Act to mean the Federal Court of Australia, a State or Territory Supreme Court or the Family Court of Australia.

36. Most relevantly, subsection 1317C(a) of the Corporations Act provides that section 1317B does not apply in relation to ‘a decision in respect of which any provision in the nature of an appeal or review is expressly provided by this Act’.

37. To that end, as set out above, subsection 1322(4)(b) of the Corporations Act provides that the Court may make ‘an order directing the rectification of any register kept by ASIC under this Act’.

38. As the Tribunal stated in CPAC at [15]:

    Section 1322(4)(b) authorises the court to review and correct irregularities in ASIC’s registers. The Tribunal is not a court. The fact the court is invested with responsibility for reviewing and amending irregularities in the register effectively ousts the Tribunal’s jurisdiction to conduct a review to the same end. I cannot order ASIC to withdraw or amend the entries it has placed on the register. That means the decision is excluded from review…

39. For completeness, the Tribunal also notes that subsection 1274(7A) of the Corporations Act provides that:

    A certificate issued by ASIC stating that a company has been registered under this Act is conclusive evidence that:

    (a) all requirements of this Act for its registration have been complied with; and

    (b) the company was duly registered as a company under this Act on the date specified in the certificate.

40. As set out above in these reasons, subsection 1317C(b) of the Corporations Act states that section 1317B does not apply in relation to ‘a decision that is…embodied in a document declared by this Act to be conclusive evidence of an act, matter or thing’. ASIC’s registration of DSJB Group was embodied in a document declared to be conclusive by the Corporations Act.

1. Accordingly, the Tribunal is satisfied that, even if the purported decisions were ‘decisions’ capable of review by the Tribunal, they are expressly excluded from review by the Tribunal pursuant to section 1317C of the Corporations Act.

2. For the above reasons, the Tribunal finds that it does not have jurisdiction to review the purported decisions of ASIC.

   Other matters

3. The Tribunal notes that some or all of the actions said to give rise to the purported decisions occurred in or around December 2021, that is almost two years before the Applicant made his application to the Tribunal. Therefore, even if they were ‘decisions’ capable of review by the Tribunal and it had jurisdiction in relation to any or all of the four purported decisions, the Applicant would have been required to make an application under subsection 29(7) of the AAT Act for an extension of time to bring his application, which would have necessitated the Tribunal’s consideration of whether to grant such an extension of time in the circumstances. As a result of the Tribunal’s finding regarding jurisdiction, it is not necessary to undertake such an analysis.

4. Additionally, pursuant to section 42B of the AAT Act, the Tribunal may dismiss an application for the review of a decision if satisfied that the application is, among other things, frivolous, vexatious, misconceived or lacking in substance. As noted above, DSJB Group was placed in external administration on 17 February 2023. Therefore, the question of the utility of any Tribunal review in relation to any or all of the four purported decisions may also have become an issue if the Tribunal’s jurisdiction had been established in this proceeding. However, again, because of the Tribunal’s finding regarding its jurisdiction, the Tribunal does not make any finding in relation to the utility of the application.

   DECISION

5. The Tribunal dismisses the application pursuant to subsection 42A(4) of the Administrative Appeals Tribunal Act 1975.

I certify that the preceding 45 (forty-five) paragraphs are a true copy of the reasons for the decision herein of Member W Frost.

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

Associate

Dated: 2 February 2024

Date(s) of hearing:	30 January 2024
Date final submissions received:	21 December 2023
Applicant:	By MS Teams
Counsel for Respondent:	Mr Christopher Hibbard
Solicitor for Respondent:	Mr Aldo Paciocco, Australian Securities & Investments Commission