Daly and Australian Securities and Investments Commission
[2020] AATA 3202
•28 August 2020
Daly and Australian Securities and Investments Commission [2020] AATA 3202 (28 August 2020)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2019/7614
Re:Peter Daly
APPLICANT
AndAustralian Securities and Investments Commission
RESPONDENT
DECISION
Tribunal:Deputy President Bernard J McCabe
Date:28 August 2020
Place:Melbourne
The Tribunal will not refer a preliminary question of law to the Federal Court or address the question of law in a preliminary hearing.
The respondent shall file an amended statement of facts, issues and contentions within 7 days of the date of these reasons.
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Deputy President Bernard J McCabe
CATCHWORDS
PRACTICE AND PROCEDURE – question of law – whether early ruling on legal issue appropriate – whether amendments to legislation apply retrospectively – consideration of Tribunals objectives – matter to proceed in usual course to hearing
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) ss 2A, 35, 41(2), 42D, 45
Corporations Act 2001 (Cth) ss 920A, 920B
CASES
Schroeder and Australian Securities and Investments Commission [2020] AATA 2453
SECONDARY MATERIALS
Commonwealth, Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Final Report (2019).
REASONS FOR DECISION
Deputy President Bernard J McCabe
28 August 2020
The Australian Securities and Investments Commission (ASIC) banned Mr Peter Daly, the applicant, from providing financial services for five years. The reviewable decision to impose the ban was communicated to the applicant in a letter dated 19 November 2019 by a delegate of ASIC (the delegate). The background to the reviewable decision is set out in reasons that accompanied the Tribunal’s decision on the application for orders under ss 35 and 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act). The reasons can be found here: Daly and Australian Securities and Investments Commission [2020] AATA 1516.
Having made the interlocutory decision, the Tribunal made timetabling directions. The applicant has asked the Tribunal to pause and consider a question about the law the Tribunal will apply at the final hearing. The question is prompted by changes to the Corporations Act 2001 (Cth) (the Corporations Act) which were made, and which came into effect, after the primary decision was made by the delegate. The amendments give effect to the recommendations of the Hayne Royal Commission into the financial services industry.[1] ASIC says the Tribunal should apply the new law to Mr Daly’s case upon review even though the delegate applied the old law in force at the time the reviewable decision was made. While that result seems counter-intuitive, ASIC says it is correct in light of the transitional provisions in the Corporations Act.
[1] Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Final Report (2019).
The relevant provisions include a change to the grounds upon which a person may be banned under s 920A(1) of the Corporations Act. The most important of these is the change to the ground referred to in s 920A(1)(d). Before amendment that ground required ASIC to consider whether it had reason to believe a person is not ‘of good fame or character’. The test embodied in that sub-section now requires ASIC to consider if it has reason to believe the applicant is not ‘a fit and proper person’. There are some associated amendments which assist in the administration of the ‘fit and proper person’ test.
There are also a number of amendments to s 920B that permit the decision-maker to make more prescriptive and extensive banning orders.
The delegate referred to the criteria in s 920A(1)(d) as it was at the time when the reviewable decision was made. The delegate made “no finding as to whether ASIC has reason to believe that Mr Daly is not of good fame or character”. ASIC now wants to rely on the new ‘fit and proper person’ test when the matter comes before the Tribunal even though the delegate did not consider that question – most obviously because the question was not before the delegate prior to the change in the law. ASIC also wants the Tribunal to make the more prescriptive orders under s 920B that potentially make it harder for Mr Daly to earn a living than would be the case under the reviewable decision.
Mr Daly may be concerned that the ‘fit and proper person’ test in the new law imposes a higher bar for him to clear compared to the old law. He may also be concerned the banning orders that can be made under the new law might be more far-reaching and restrictive than the banning order made by the delegate. Whatever his private concerns, Mr Daly’s counsel pointed to procedural issues when the matter was listed for discussion at a directions hearing. Ms Keily, counsel for Mr Daly, says she is unclear on the case Mr Daly faces at the hearing. Mr Daly wants a definitive ruling on whether the old law applies, or the new.
ASIC has made clear in its statement of facts, issues and contentions that it believes the new law applies. It has prepared its case on that basis. ASIC says the factual record is similar to that before the delegate: while the factual record may evolve by the time the matter is ripe for a hearing (as factual records tend to do in the ordinary course), ASIC says the different questions posed by the old and new versions of s 920A(1)(d) can be answered on more or less the same facts. If necessary, ASIC says it is prepared to argue both versions of the law in the alternative, which it says can be done without undue cost and inconvenience to either party. ASIC also said it could, if the Tribunal required, formally refer to both the old and new law in an amended statement of facts, issues and contentions. ASIC adds that it should be an easy matter to address the expanded scope of the banning orders under s 920B at the hearing should the Tribunal exercise the discretion in s 920A.
ASIC relies on the recent decision of the Tribunal in Schroeder and Australian Securities and Investments Commission [2020] AATA 2453 (Schroeder). ASIC says Schroeder squarely addresses the question raised by the applicant in this case. In Schroeder, the President of the Tribunal and I decided the transitional provisions inserted into the Corporations Act by the amending legislation had the effect of requiring the Tribunal to apply the new law in the course of that review. We noted our decision was not binding. Tribunal members in other similar cases would have to reach their own conclusion on which law to apply. ASIC says the issue can be addressed during submissions at the conclusion of the hearing in this matter. It says there is no particular advantage in bringing on the question for early determination.
Mr Daly would prefer a more definitive conclusion at the outset. He says he will suffer substantial prejudice if he does not know in advance what the Tribunal’s banning powers will be. He has proposed the Tribunal refer the matter to the Federal Court on a question of law under s 45 of the AAT Act. In that event, the Chief Justice may well decide to list the matter before a Full Court given it would effectively be reviewing the decision of the President, who is a Federal Court judge. There is some difficulty with that course. It will certainly involve delay, and the delay may be extensive given the time of year and demands on the resources of the Federal Court. While ASIC would not experience serious prejudice in that event because the applicant has not secured a stay of the reviewable decision, there is some cost to waiting. Memories fade, documents are lost, and witnesses move on. It is always best to elicit the evidence in complex factual scenarios, like that under consideration in this case, as soon as practicable.
Another alternative is for the Tribunal as presently constituted to hold a preliminary hearing and provide a ruling. That option might involve somewhat less delay in the fact-finding process (assuming there is no appeal from the ruling), but experience suggests there is some risk in isolating individual questions for determination in the name of expedition or efficiency. Split hearings often fail to meet either of those objectives, and they can be counterproductive. We had a split hearing in Schroeder, but we agreed to that course after careful consideration: the Tribunal had around 25 active cases (including this one) where this particular issue arises, and it was agreed Schroeder provided a suitable vehicle for an illustrative discussion of the issue that would focus the debate in the individual cases. As it happened, the applicant in Schroeder decided at the last minute he was unable to participate in the preliminary hearing for reasons of expense, which rather underlines the Tribunal’s scepticism about cost-saving.
I also canvassed the option of a remittal under s 42D of the AAT Act. The remittal would provide an opportunity for the delegate to resume the hearing and consider the applicant’s position under the new law. A remittal is an attractive option where the primary decision-maker is in a better position to deal with the outstanding questions. There is also some conceptual appeal to a remittal in a case like this. The Tribunal is a review body, and a remittal would restore the synchronicity between the primary decision-maker and the review body that was discussed in Schroeder. ASIC pointed out it would take some time for the delegate to reconvene in the event of a remittal, and it is not clear whether there is any other advantage in this course.
Speed is not the only concern in a matter like this, of course. All of the matters referred to in s 2A of the AAT Act which sets out the Tribunal’s objectives are relevant. The factors are whether a review is accessible, fair, just, economical, informal and quick, proportionate to the importance and complexity of the matter, and promotes public trust and confidence in the decision-making of the Tribunal. Those factors must be considered in light of the circumstances of this case – with particular concern for questions of procedural fairness.
I am satisfied that, having regard to all the matters referred to in s 2A and the circumstances of this case, it would be appropriate to proceed to a hearing in the ordinary course and deal with the technical legal question in submissions. I am not satisfied there should be a referral to the Court, or an early determination of the issue. The Tribunal is able to make a determination. If I make a mistake at the hearing, the applicant can appeal the decision to the Federal Court at that point. The potential difference in the grounds as a result of the amendments, and the new powers, are unlikely to significantly complicate the applicant’s task at the hearing. The applicant is well-aware of ASIC’s case which was set out in the statement of facts, issues and contentions some months ago. While the applicant might need to file some additional evidence, there is no reason to suppose that cannot be done conveniently before the hearing. For the sake of clarity, I will direct ASIC to file an amended statement of facts, issues and contentions that makes explicit the alternate argument in the event I decide the old law applies. That document should be filed and exchanged within 7 days of these reasons.
Proceeding to a hearing without further delay is the best course in the circumstances. The advantages that might flow from an early determination of the issues do not outweigh the costs and disruption and delay that may yet result.
I certify that the preceding 13 (thirteen) paragraphs are a true copy of the reasons for the decision herein of Deputy President Bernard J McCabe
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Associate
Dated: 28 August 2020
Date(s) of hearing: 21 August 2020 Counsel for the Applicant: Ms L Keily Solicitors for the Applicant: Liam Young Legal Counsel for the Respondent: Mr M Brady QC and Mr L Clark Solicitors for the Respondent: Australian Securities and Investments Commission
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