Bundy v Australian Securities and Investments Commission
[2013] AATA 59
[2013] AATA 59
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2012/5697
Re
Harold Bundy
APPLICANT
And
Australian Securities and Investments Commission
RESPONDENT
File Number(s)
2012/5700
Re
Ezymanagement Pty Ltd
APPLICANT
And
Australian Securities and Investments Commission
RESPONDENT
DECISION
Tribunal The Hon. Brian Tamberlin, QC, Deputy President
Date 4 February 2013 Place Sydney
The Applications for stay are refused.
..............................[sgd]..........................................
The Hon. Brian Tamberlin, QC, Deputy President
CATCHWORDS
PRACTICE AND PROCEDURE - Stay Application - Tribunal not of the opinion that it is desirable to make stay order - Applicants' request for stay order refused.
LEGISLATION
Administrative Appeals Tribunal Act, ss 35(2), 41(2)
National Consumer Credit Protection Act 2009, ss 55, 80, 81
REASONS FOR DECISION
The Hon. Brian Tamberlin, QC, Deputy President
4 February 2013
On 10 December 2012 the Respondent decided to suspend the Australian credit licence held by the Applicant Ezymanagement Pty Ltd under s 55 of the National Consumer Credit Protection Act 2009 (the Act). On the same day, the Respondent decided to ban the Applicant Mr Bundy from engaging in credit activities for a period of three years under ss 80 and 81 of the Act.
The Applicants have applied to the Tribunal for orders under s 41(2) of the Administrative Appeals Tribunal Act 1975 (the AAT Act) for the stay and suppression from publication of the decisions. There was also initially an application for confidentiality orders under s 35(2) of the AAT Act. In relation to the confidentiality application the Applicants have indicated that in the event a stay is granted they would be satisfied with a notation to that effect on publicly available information.
ISSUE
The issue is whether a stay should be granted in respect of the suspension and banning orders pending final determination of the review proceedings.
BACKGROUND
The power of the Tribunal to stay the operation of a decision under review, given by s 41(2) of the AAT Act, arises where the Tribunal considers it desirable to make such an order, after taking into account the interests of any persons who may be affected by the review. The Tribunal has a wide power to make such order as it considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review.
In deciding whether a stay should be granted, the Tribunal should take into account the public interest, and particularly the need to protect consumers of financial services. Other relevant matters include the prospects of success of the application for review; the consequences for the Respondent in carrying out its functions and for those whose interest may be affected by the review.
Section 55 of the Act provides for suspension or cancellation of a licence by the Australian Securities and Investments Commission (ASIC) if the licensee is not a “fit and proper person to engage in credit activities”. Under s 80, a banning order may be made where ASIC has reason to believe that a person is not a fit and proper person to engage in credit activities.
On this stay application, Mr Bundy has filed an affidavit of 16 January 2013 in which he states that the main credit activity in which he is engaged presently is what he refers to as “the Debt Free Program” which he asserts consists of giving counsel to consumers in relation to formulating and implementing recovery plans to satisfy creditors. The publicity for Ezymanagement refers to a range of activities including conflict resolution; management consulting; marketing services; accounting services; and technology services. Mr Bundy says that 90 per cent of his income is derived from the financial crisis management activities, which provide financial assistance to persons threatened with legal recovery by creditors in the nature of arranging a plan or compromise with creditors.
Mr Bundy submits that this aspect of his activity does not require a licence. He states that he is prepared to agree, as a condition of a stay, to limit his activities to those referred to in his affidavit.
On this application, however, it is not necessary for me to resolve this question, because the application is based on the premise that he does require a licence and there has been no detailed evidence as to the full extent and nature of his activities.
In support of the applications for a stay, Mr Bundy and Ezymanagement advance the following considerations:
·The Applicants have not been shown to have breached any provisions of the Act; the findings of the Respondent relate to breaches of duties as company director and go to unsuitability for that role and do not go to the credit advisory function.
·There is a finding in the decision of the Respondent that Mr Bundy has not been guilty of dishonesty or knowingly breaching obligations.
·The disqualification period of three years against Mr Bundy is excessive given his age. He is now eighty-four years of age and the ban would amount to a lifetime ban in effect.
·If Mr Bundy is banned, there being no one who can replace him, his business activities will practically cease. His son who was employed in the business has severe chronic fatigue syndrome.
·Because of the small scale of Mr Bundy’s present activities and their limited nature, there is no significant risk to members of the public and consumers of the services which Mr Bundy and Ezymanagement provide.
·The decision of the Respondent was based on material in the form of reports and conclusions reached by liquidators and administrators without the primary evidence having been properly tested.
·The prospects of success on the review applications are substantial.
·There will be financial hardship while the ban and suspension are in force because Mr Bundy will not be able to earn income and is presently on a joint pension with his wife.
In the course of cross-examination Mr Bundy said that Ezymanagement employed him at a salary in the order of $150 per week and that he and his wife are in receipt of the age pension. Ezymanagement had incurred a small loss in the last year. The company is controlled by Mr Bundy and his family. His evidence was somewhat unsatisfactory in that he claimed not to know the extent of his income or the value of his property or the mortgagee of his property with any degree of certainty.
The Respondent referred to the detailed evidence and reasoning for the decisions under review. It appears that Mr Bundy has been a director or associated with a number of companies which have failed and incurred extensive debts involving losses to creditors of substantial amounts, which in some instances exceed $1 million. There is evidence that he has permitted insolvent trading in circumstances where he knew or ought to have known that the company concerned was insolvent, and he has made arrangements to avoid or hinder the implementation of court processes in the form of a garnishee order. There is also evidence that he has failed to file income tax returns in relation to Ezymanagement. The Respondent submits these matters are indicative of a lack of diligence and non-compliance with statutory obligations.
REASONING
The matters referred to in [12] above, in my interpretation, lend substantial support to the view that Mr Bundy is not a fit and proper person. I recognise this conclusion has not been fully tested and that the Applicants have not yet had an opportunity to make submissions in relation to these areas of concern and the determinations made against them. However, the reports on which the decisions under review are based have been supported by documents and have been made by responsible officers acting in performance of statutory duties. Therefore weight should be given to their findings and reasoning. The Applicants have not provided any satisfactory countervailing evidence which would enable a finding to be made that they have a substantial prospect of success on the applications for review. Moreover, given the uncontested matters referred to in the determinations, I consider there is a real danger that clients of the Applicants may be exposed to advice or suggestions which could be prejudicial to their financial situation. The material referred to by the Respondent at least on a prima facie basis on the present evidence before me supports the conclusions reached by the Respondent. I do not need to reach a final conclusion on these matters for the purpose of this stay application.
The Applicants suggest that a finding that a person is not a “fit and proper person” to be a company director does not mean that he or she is not a fit and proper person to engage in activities, such as those Mr Bundy seeks to carry out as part of his “Debt Free Program”. I do not agree. I consider that the finding of lack of fitness to act as a director in the present case supports a conclusion that Mr Bundy should not provide the advice which he wishes to give.
I am not satisfied, on the evidence of Mr Bundy, that the Applicants will suffer undue hardship if the stay is not granted in this case. Mr Bundy claimed expertise as a financial adviser, yet he was extremely vague as to the nature and extent of his assets, was unable to recall the identity of the mortgagee or any specific amounts or the precise amount of his income or the amount of the pension, claiming that this latter matter was attended to by his wife. I give greater weight to the need to protect the consumers and prospective clients of the Applicants by refusal of the stay applications pending determination of the review. In reaching this conclusion, I have taken into account the fact that this matter has considerable urgency and should be given an expedited hearing so that it is heard as soon as possible. If this course is adopted then any disruption to the activities or income position of the Applicants will be reduced.
The Applicants can, if they wish, make an application for an accelerated timetable for directions as to preparation of their case and hearing. Indications given at the hearing of the stay application were that evidence would not be unduly lengthy and should be able to be resolved within a relatively short time.
CONCLUSION
For the above reasons the applications for stay are refused. The Tribunal directs that the hearing of these proceedings be expedited. The Tribunal makes no direction as to confidentiality.
I certify that the preceding 17 (seventeen) paragraphs are a true copy of the reasons for the decision herein of the Hon. Brian Tamberlin, QC, Deputy President. ...............................[sgd].........................................
Associate
Dated 4 February 2013
Date(s) of hearing 17 January 2013 Solicitors for the Applicant Hillman, Laxon & Tobias Lawyers Counsel for the Respondent Ms M Avenell Solicitors for the Respondent ASIC Legal Section
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