Dimitropoulos and Australian Securities and Investments Commission
[2019] AATA 1775
•10 July 2019
Dimitropoulos and Australian Securities and Investments Commission [2019] AATA 1775 (10 July 2019)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2017/3749 & 2017/3754
Re:John Dimitropoulos
APPLICANT
AndAustralian Securities and Investments Commission
RESPONDENT
DECISION
Tribunal:Mr P W Taylor SC, Senior Member
Date:10 July 2019
Place:Sydney
Mr Dimitropoulos’ application for a notice requiring ASIC to lodge the additional documents (i.e., those referred to in the Schedule to these reasons), is refused
............................[SGD]............................................
Mr P W Taylor SC, Senior Member
CATCHWORDS
PRACTICE AND PROCEDURE – Administrative Appeals Tribunal Act s 37(2) – application for notice requiring lodgement of witness statement instructions and draft witness statement – general assertions of relevance to witness credit – scope of the "may be relevant" criterion – relevance of decision maker's obligation to lodge relevant documents – discretion not to require lodgement of potentially relevant documents
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) ss 33, 35, 37, 38AA, 40B
Corporations Act 2001 (Cth) ss 761A, 763A, 766A, 911A, 913B, 920A, 920B, 1311
Freedom of Information Act 1982 (Cth)
National Consumer Credit Protection Act 2009 (Cth) ss 80, 81, 253, 259CASES
A v Z [2007] NSWSC 899; (2007) 212 FCR 255
ACN 154 520 199 Pty Ltd and Commissioner of Taxation [2018] AATA 33
Alister v R (1984) 154 CLR 404
APRA v VBN [2005] FCA 1868; (2005) 88 ALD 403
Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd [1998] FCA 1599
ASIC v Whitlam [2002] NSWSC 526; (2002) 42 ACSR 143
Bird v Military Rehabilitation and Compensation Commission [2006] AATA 109; (2006) 91 ALD 691
Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98
Brand v Digi-Tech (Australia) Ltd [2001] NSWSC 425
Burchard v Macfarlane [1891] 2 QB 241
Caltex Refining Co Pty Ltd v The Amalgamated Metal Workers' Union (1990) 51 IR 113
Campaign Master (UK) Ltd v Forty Two International Pty Ltd (No 4) [2010] FCA 398; (2010) 269 ALR 76
Cash World Gold Buyers and Commissioner of Taxation [2017] AATA 736
Chapman v Luminis Pty Ltd [2001] FCA 1580
Comcare v Maganga [2008] FCA 285
Commissioner of Taxation v ACN 154 520 199 Pty Ltd [2018] FCA 1140
Cosco Holdings Pty Ltd v Federal Commissioner of Taxation [1997] FCA 1504
Dorajay Pty Ltd v Aristocrat Leisure Ltd [2005] FCA 588
Foley v Padley (1984) 154 CLR 349
Fried v National Australia Bank Ltd [2000] FCA 911; (2000) 175 ALR 194
Hamilton v Oades (1989) 85 ALR 1
Jack Brabham Engines Ltd v Beare [2010] FCA 35
Kennedy v Administrative Appeals Tribunal (2008) 168 FCR 566
Re KLGL and QCYY and Australian Prudential Regulation Authority [2008] AATA 452
Liristis v Gadelrabb [2009] NSWSC 441
Mackintosh v The Commissioner of Police (NSW) [2010] NSWSC 1064
Marsden v Amalgamated Television Services Pty Ltd [1999] NSWSC 619
McHugh v Australian Jockey Club Limited [No 2] [2011] FCA 724
McIlwain v Ramsey Food Packaging Pty Ltd [2005] FCA 1233; (2005) 221 ALR 785
National Employers Mutual General Insurance Association v Waind [1978] 1 NSWLR 372
Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 62 ALJR 389
Pasini v Vanstone [1999] FCA 1271
R v Barton [1981] 2 NSWLR 414
Santos Ltd v Pipelines Authority (SA) (1996) 66 SASR 38
Senanayake v Migration Registration Authority [2019] AATA 225
Senior v Holdsworth; ex parte Independent Television News Ltd [1976] 1 QB 23
South Pacific Hotel Services Inc v Southern Pacific Hotel Corporation Ltd [1984] 1 NSWLR 710
Spencer Motors Pty Ltd v LNC Industries Ltd (1982) 2 NSWLR 921
Re Spicer Axle Structural Components Australia Pty Ltd v Secretary, Department of Industry, Tourism and Resources [2005] AATA 77; (2005) 83 ALD 104
Tamawood Ltd v Habitare Developments Pty Ltd [2009] FCA 364
Taylor v O’Neill [2012] NSWSC 626
Re Thomas Cook Australia Pty Ltd v Collector of Customs (1994) 34 ALD 301
Thomas v SMP (International) Pty Ltd (No 2) [2010] NSWSC 870
Trade Practices Commission v Arnotts Ltd (1989) 21 FCR 306; 88 ALR 90
Treasurer of the Commonwealth of Australia v Canwest Global Communications Corporation [1997] FCA 578
VCA and Australian Prudential Regulation Authority [2008] AATA 580
VMQD v Federal Commissioner of Taxation [2018] AATA 3147
WA Pynes Pty Ltd v Bannerman (1980) 41 FLR 175
Re Wertheim v Department of Health (1984) 7 ALD 121
Wong v Sklavos [2014] FCAFC 120; (2014) 319 ALR 378REASONS FOR DECISION
Mr P W Taylor SC, Senior Member
10 July 2019
Mr Dimitropoulos’ 27 June 2017 substantive review applications concern two decisions ASIC made on 23 June 2017:-
(a)the credit decision:- an order under ss 80(1) & 81(1) & (2) of the National Consumer Credit Protection Act 2009 (Cth) (“CredAct”) permanently banning Mr Dimitropoulos from engaging in any credit activities
(b)the financial services decision:- an order under ss 920A(1) & 920B(1) & (2) of the Corporations Act 2001 (Cth) (“CorpAct”) permanently banning Mr Dimitropoulos from providing any financial services.
For the purpose of the imminent hearing of those applications Mr Dimitropoulos seeks an order under s 37(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (“AAT Act”). The order sought is that ASIC lodge with the Tribunal 19 file notes of communications between ASIC officers and three witnesses whose statements ASIC had lodged with the Tribunal, and a draft statement of one of those witnesses. The three ASIC witnesses (Messrs Dona, Murphy and Naish) had all worked as sales consultants for “Heritage FSA” during 2010 and 2011, and ended their association with it at different times between March 2012 and July 2013. (Heritage FSA is an entity I describe later in these reasons:- see paragraph 10(b) below). Relevant particulars of their respective witness statements, and the contentious documents to which the current lodgement application relates, are set out in the Schedule to these reasons.
Mr Dimitropoulos became aware of the existence and nature of the contentious documents as a result of ASIC’s 24 July 2018 response to a Freedom of Information Act1982 (Cth) (“FOI Act”) request. That request sought the release of “any transcript of, or file notes made … during an interview, conversation or examination conducted by ASIC” of any of the three individual sales consultants. (It seems likely that the FOI Act request was made following earlier unsuccessful attempts to obtain (a wider category of) documents by summons.) ASIC’s response identified the 20 documents as recording “instructions and discussions with individuals during the preparation of their respective witness statements”. That explanation resulted in ASIC’s classification of the documents as subject to legal professional privilege, and consequentially exempt from disclosure under the FOI Act.
MR DIMITROPOULOS’ LODGEMENT ARGUMENT
The starting point in Mr Dimitropoulos’ submissions supporting the lodgement application is that the contentious documents are known to record “instructions and discussions” with Messrs Dona, Murphy and Naish during the preparation of their respective witness statements. It is said that their contents must have been relied on in preparing those statements. The suggestion is that, if the contents of the statements had been elicited in a formal recorded examination process they would necessarily have been made available:- see CredAct ss 253 & 259. The next point in the argument is that the credit of each of the three witnesses will be impugned in the proceedings. In particular, Mr Dimitropoulos points to the fact that each of the three witnesses had their relationship with Heritage FSA terminated, because of the alleged diversion of clients to the company’s competitors, on various occasions between March 2012 (Mr Naish) and July 2013 (Mr Murphy).
The third element in Mr Dimitropoulos’ submissions is that any documents that have the capacity to assist in the cross examination challenge to the credit of a witness satisfy the criterion of relevance (and the AAT Act s 37(2) “may be relevant” criterion) and should be lodged. The submission’s emphasis is that it is unnecessary to establish that the contentious documents are in fact likely to assist in the credit cross examination. It is said to be sufficient that the documents may “throw light” on the material matters in dispute. Mr Dimitropoulos submits that these are the principles that govern the production of documents in response to a summons or subpoena, and contends that the same principles should apply to the exercise of the complementary lodgement power in AAT Act s 37(2).
THE DOCUMENT LODGMENT DISCRETION
The lodgement obligation imposed on decision makers in relation to reviewable decisions of the present kind, and the Tribunal’s complementary power to order a decision maker to lodge additional documents, are primarily expressed in AAT Act ss 37(1) and 37(2). Their presently relevant content (with the emphases I have added) is as follows:-
Decision-maker must lodge material documents
1Subject to this section, a person who has made a decision that is the subject of an application for review … by the Tribunal must, within 28 days after receiving notice of the application (or within such further period as the Tribunal allows), lodge with the Tribunal a copy of:
(a)a statement setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision; and
(b)subject to any directions given under section 18B, every other document that is in the person's possession or under the person's control and is relevant to the review of the decision by the Tribunal.
…
Tribunal may require other documents to be lodged
2Where the Tribunal is of the opinion that particular other documents or that other documents included in a particular class of documents may be relevant to the review of the decision by the Tribunal, the Tribunal may cause to be given to the person a notice in writing stating that the Tribunal is of that opinion and requiring the person to lodge with the Tribunal, within a time specified in the notice, the specified number of copies of each of those other documents that is in his or her possession or under his or her control, and a person to whom such a notice is given shall comply with the notice.
Privilege and public interest
3This section has effect notwithstanding any rule of law relating to privilege or the public interest in relation to the production of documents.
Where AAT Act s 37(1) requires a decision maker to lodge documents with the Tribunal, the decision maker must also provide a copy to the review applicant, unless the Tribunal makes a contrary direction:- see AAT Act s 37(1AE). There is no express statutory obligation for a decision maker to provide a review applicant with copies of documents lodged in compliance with a notice given under AAT Act s 37(2).
It is readily apparent that AAT Act s 37(1) imposes on a decision maker an obligation to lodge with the Tribunal copies of any document (in its possession or control) that “is relevant” to the review of the decision by the Tribunal. That relevance is to be determined objectively, rather than according to the decision maker’s subjective opinion:- see paragraph 70 below. The power conferred by AAT Act s 37(2) is a complementary, but discrete, discretionary power. Its threshold requirement is the Tribunal’s opinion that a document (or class of documents) “may be relevant” to the review of the decision by the Tribunal. That opinion must be reasonably formed on the basis of a correct understanding of the terms and purpose of the statutory power:- Foley v Padley (1984) 154 CLR 349 at 353, 370 & 375.
The power and discretion conditionally conferred by AAT Act s 37(2) (and the related discretions in AAT Act ss 37(1AE), 38AA(2) & 40B) are to be exercised against the background statutory intention, and inherent desirability, that the Tribunal, and the parties to Tribunal proceedings, should have regard to all matters that should be taken into account for the purpose of the decision review:- see Re Wertheim v Department of Health (1984) 7 ALD 121 at 154 & AAT Act s 35(5)(c).
THE PRINCIPAL FOCUS OF ASIC’S JUNE 2017 DECISIONS
Both of ASIC’s June 2017 decisions concerned the character of Mr Dimitropoulos’ conduct, in the period from about mid-2009 to about mid-2013, principally in relation to the activities of two companies – Sunpac Finance Pty Ltd and Heritage Financial Solutions Australia Pty Ltd. Both companies operated from the same premises, and had some personnel in common. Some brief material particulars of those companies and their activities (based on my current, and preliminary, understanding of the limited material I have considered for the purposes of the lodgement application) are as follows:-
(a)Sunpac Finance Pty Ltd – “Sunpac”:- Sunpac was incorporated in about 1998. After 4 July 2001 Mr Dimitropoulos became its sole director, secretary and shareholder. The company seems to have operated as a mortgage broker, or similar intermediary, and summited loan applications to various financial institutions. It had a small staff of three or four. They included Mr Michael Wilkins, in the role of finance manager (from around 2001 until 2012) and Mr Parham Taba, as a customer service officer (after about December 2006). Sunpac obtained an Australian credit licence in February 2011. According to Mr Dimitropoulos’ affidavit, Sunpac wound down its loan application business shortly after obtaining its credit licence, and had almost ceased operations by about June 2011. At the end of June 2013, Mr Dimitropoulos resigned as a director, and sold his interest in Sunpac.
(b)Heritage Financial Solutions Australia Pty Ltd - “Heritage FSA”:- This was an entity that Mr Taba incorporated in February 2010 and of which he was the sole director and shareholder. From May 2010 to 21 December 2012 Heritage FSA was an authorised representative of AAA Financial Intelligence Ltd, for the purpose of providing administration and clerical services in relating to arrangements for dealing in (ie., acquisition and disposal of) financial products In July 2011 Heritage FSA obtained an Australian credit licence. Mr Taba says he both borrowed money, and acquired office equipment, from Mr Dimitropoulos for the purpose of setting up HFSA’s operations. But both he and Mr Dimitropoulos say that Mr Dimitropoulos had no management role in Heritage FSA.
At least one other company had some degree of (apparent or asserted) association with Sunpac, Heritage FSA, Mr Dimitropoulos, Mr Taba and Mr Wilkins. That was Heritage Financial Solutions Pty Ltd (“HFS”):- A brief (necessarily preliminary) outline of apparently relevant information relating to that company is as follows:-
(a)HFS operated from the same office premises as Sunpac and Heritage FSA.
(b)HFS was apparently controlled by a man named Parisi. He was a property developer, a long standing family and business associate of Mr Dimitropoulos and a person whom Mr Taba had known for many years.
(c)Since about 2000 Mr Dimitropoulos had provided “services” to Mr Parisi, including the negotiation of “land options and other transactions”. He had business cards, in the name “Heritage Financial Solutions”, which he said he had been supplied with in connection with the company business of Mr Parisi.
(d)From 17 May 2010 until 17 February 2011 HFS was credit registered, and in that period Mr Wilkins provided it with mortgage broking services. Mr Taba said in his statement that, up until about July 2011, Heritage FSA used to refer clients seeking home loans to either HFS or Sunpac.
(e)According to Mr Wilkins’ statement, after ending its credit registration, HFS “focused on lead generation” activities. Mr Taba described HFS as having decided, at that time, to “move away from finance and SMSF admin”. He also described HFS’ business as including that of referring “leads” for a fee, and said that, until about July 2011, Heritage FSA paid HFS between $300 and $500 for each “property lead” HFS generated.
(f)Mr Taba’s statement described Heritage FSA as having “sought to take over” some of HSF’s clients, and noted that, in that endeavour it was “helpful” that the two companies had similar names.
(g)Mr Wilkins acknowledged in his statement that he mistakenly (but unintentionally and infrequently) “signed off” under “HFS” instead of Heritage FSA.
ASIC’S CREDACT DECISION FINDINGS
ASIC’s credit decision involved three main findings about Mr Dimitropoulos’ conduct relating to Sunpac. They were to the effect that (i) he had made misrepresentations about Sunpac’s CredAct compliance, (ii) he had been involved in Sunpac’s non-compliance with aspects of its general conduct obligations, and (iii) his conduct provided reason to believe in the likelihood of future non-compliance with credit legislation.
The first of ASIC’s findings concerned what it regarded as deficiencies in the content of Sunpac’s 2012 and 2013 annual compliance certificates. In particular, ASIC considered Sunpac had not demonstrated it had provided clients with appropriate information about credit alternatives and conflicts of interest. ASIC’s concern about those matters arose from what it regarded as the opacity of the arrangements under which Mr Dimitropoulos received payments from associated entities apparently involved in the client transactions, and their non-disclosure to Sunpac’s employees.
ASIC considered Heritage FSA had continued Sunpac’s business and, like Sunpac, had failed to advise clients appropriately about either (i) alternative credit products, or (ii) conflicts of interest. ASIC found that, from July 2010 to the end of June 2011, Heritage FSA had engaged in credit activity without being registered. ASIC considered that Mr Dimitropoulos had been an integral part of Heritage FSA’s business operations. ASIC also considered that Mr Dimitropoulos’ “integral” role in Heritage FSA’s operations required the conclusion that he had been knowingly involved in that unlicensed credit activity.
ASIC “FINANCIAL SERVICES” DECISION FINDINGS
ASIC’s financial services decision concerned the character of Mr Dimitropoulos’ conduct in relation to what it described as the “Heritage” business. It regarded that business as having been conducted from about mid-2009 (i.e., prior to Heritage FSA’s incorporation) and as having the characteristics outlined earlier in these reasons:- see paragraph 22 above. ASIC considered that the business involved providing “financial product advice”, having regard to the relevant statutory definitions of “financial product” and “financial product advice”:- see CorpAct ss 761A, 763A(1), 766A(1). The business was, therefore, a “financial services business” whose lawful conduct required Heritage FSA to have held either (i) an Australian financial services licence (“AFS licence”), or (ii) an authority from such a licensee:- see CorpAct ss 911A(1), 913B & 1311. ASIC accepted that Heritage FSA held an authority from May 2010 to December 2012, but considered that it had been limited to providing administrative and clerical services, and did not extend to “financial product advice”.
ASIC’s decision reasons rejected claims that Heritage FSA had conducted its business so as to ensure that (i) the conduct of its representatives was limited to eliciting the interest of potential clients, and (ii) all financial product advice was given by an appropriately authorised third party. In relation to Mr Dimitropoulos’ personal involvement in, and responsibility for, the shortcomings in Heritage FSA’s activities ASIC found that Mr Dimitropoulos:-
(a)held a controlling management position in “Heritage”
(b)had investigated whether Heritage FSA required a financial services licence for its activities
(c)had provided training to Heritage FSA about ASIC’s Regulatory Guide 146 “Licensing: Training of financial product advisers” - and was likely to have been well aware of both the relevant licensing requirements, and of the fact that Heritage FSA did not hold such a licence
(d)was relevantly and directly responsible for “a complete disregard for the law in the businesses of Sunpac and “Heritage”
(e)was knowingly involved in Heritage FSA’s CorpAct contraventions
(f)(in apparent alternative to the other matters) had at least failed to recognise that his involvement had involved a potential conflict of interest, and that failure provided a basis for concluding that there was reason to believe Mr Dimitropoulos was likely to contravene financial services laws.
MR DIMITROPOULOS APRIL 2018 AFFIDAVIT
Mr Dimitropoulos’ April 2018 statement sets out his personal background and explains Sunpac’s initial operations, in the period from 2001 to 2009, essentially as a home loan facilitator or intermediary. It details the steps that Sunpac took to acquire its CredAct licence (in February 2011).
Thereafter Mr Dimitropoulos’ statement details the responses to ASIC’s 6 December 2012 and 12 March 2013 notices and sets out his views about Sunpac’s policies, practices and procedures relevant to those notices, and the ways in which Sunpac complied with its credit licence conditions. In relation to that matter he acknowledges his personal responsibility for the preparation of Sunpac’s procedures, and for the content and delivery of staff training (particularly in relation to Sunpac’s “conflict plan”). He says that he maintained and implemented plans as to how Sunpac recruited, developed and monitored employees and contractors, and says that he did so in accordance with the CredAct guidelines. In another part of this statement Mr Dimitropoulos says that in around February or March of both 2012 and 2013 he discussed with Mr Wilkins the adequacy of Sunpac’s compliance measures, and undertook with him a review in connection with the submission of Sunpac’s Annual Compliance Certificate.
Mr Dimitropoulos acknowledges in his April 2018 statement that he was Sunpac’s sole director, and the main person responsible for monitoring, managing and assessing Sunpac’s financial statements and resources. He says that he reviewed, and satisfied himself about the accuracy of, Sunpac’s financial accounts on a monthly basis. He also described himself as the person responsible for ensuring the appropriateness and security of Sunpac’s information technology resources. He also, at least implicitly, accepts and acknowledges his responsibility for Sunpac’s risk management when he says in his statement that he “managed Sunpac’s risk management policy on a day-to-day basis”.
Mr Dimitropoulos asserts in his statement that Sunpac and Heritage FSA operated their businesses quite separately. He says he “never assisted, or advised” Heritage FSA in the conduct of its business. He characterised his involvement with Heritage FSA as “limited to helping Mr Taba” by way of discussions of a general nature including overall performance and the performance of staff members. He acknowledges that he “also assisted with the training of Heritage’s staff and sales people” - both on an initial and ongoing basis. However, those discussions seem likely to have been somewhat more than general, because Mr Dimitropoulos also acknowledges in this statement that he “assisted with managing some of those sales consultants who Mr Taba found to be high maintenance”. That degree of management involved dealing with their invoices, bonuses commissions and listening to their personal issues and gripes. He said this continued right up until sometime in 2012 when, he says, Mr Taba devised the idea of establishing a remuneration committee within Heritage FSA.
Despite those acknowledgements, particularly in relation to training, Mr Dimitropoulos denies (in general terms) each of Mr Murphy, Nash and Dana statements about the training that he provided:- see paragraph below. He specifically denies that in his training he included statements about SMSF loan and purchase transactions.
A PRELIMINARY OVERVIEW OF HERITAGE FSA’S ACTIVITIES
Despite his disavowal of any Heritage FSA management role, Mr Dimitropoulos seems to have some familiarity with, and understanding of, the nature of its operations. In his April 2018 statement supporting his substantive review applications Mr Dimitropoulos described Heritage FSA as “an integrated finance company offering property, home loans and superannuation solutions to its clients”. Mr Taba’s statement described the intended scope of the company’s business in a similar way. He said it was “vertically integrated”. ASIC’s decision reasons arguably flesh out what those integration concepts involved. They describe the Heritage FSA business as involving the following elements:-
(a)arguably unsolicited approaches to prospective clients about using their superannuation funds to buy house and land packages
(b)obtaining details of individual clients’ financial position
(c)recommending to clients that they take steps to
(i) set up a self-managed superannuation fund (“SMSF”)
(ii) roll existing superannuation balances into such a newly created SMSF
(iii) use the funds placed in the SMSF to assist with property purchase and housing construction contracts
(iv) borrow other funds to assist with honouring their contractual purchase and construction obligations
(d)assisting clients to enter into contracts for land purchase and house construction.
According to Mr Taba’s April 2018 statement, and perhaps consistent with ASIC’s description, Heritage FSA engaged “independent contractors (up to five or six at any one time) whose role he described as that of “fact finders” or “in home property consultants”. It also employed Mr Wilkins, as an “employee loan writer”. His period of employment was either from about February 2011 (according to Mr Taba) or mid 2011 (according to Mr Wilkins and Mr Dimitropoulos). (On either version, Mr Wilkins’ HFSA employment appears to have overlapped with the period of his continuing role as Sunpac’s “finance manager”:- see paragraph 10(a) above.)
Mr Taba said Heritage FSA acquired its clients by “referrals” from Sunpac and HFS – an entity to which I earlier referred:- see paragraph 11 above. That was especially the case after July 2011 when those entities decided they would not take on any new business. Notwithstanding those referrals to HFSA, both Mr Taba and Mr Dimitropoulos indicate in their statements that, until July or August 2011, Heritage FSA referred home loan application business to Sunpac.
Notwithstanding the interchange of referrals between Sunpac and Heritage FSA, and their common office location, Mr Dimitropoulos’ statement describes their respective businesses as distinct. However, the statement also indicates the following matters:-
(e)Mr Dimitropoulos assisted Mr Taba / Heritage FSA with discussions of a “general nature”, which included Heritage FSA’s overall performance and the performance of staff members
(f)Mr Dimitropoulos assisted Heritage FSA by providing staff training, both on an initial and ongoing basis
(g)Mr Dimitropoulos assisted Heritage FSA with managing some of those sales consultants who Mr Taba found to be “high maintenance”. That degree of management involved dealing with their invoices, bonuses and commissions and listening to their personal issues and gripes
(h)Mr Dimitropoulos assistance, specifically in relation to staff management, continued right up until sometime in 2012 when, he says, Mr Taba devised the idea of establishing a remuneration committee within Heritage FSA.
THE CONTENT OF THE DONA, MURPHY AND NAISH STATEMENTS
The matters I have outlined above provide the background necessary to appreciate the content and, as presently apparent, potential significance of the statements of Messrs Dona, Murphy and Naish. Although the duration of their respective periods of association with Heritage FSA differed, they all worked as “sales consultants” for the company from at least early 2010 until March 2012.
It is obvious from the details summarised in the Schedule that their respective statements (as included in the documents lodged by ASIC) differ in length and detail (at least in terms of the number of their annexures). Nevertheless, they have a number of common elements. Those common elements include the following:-
(a)they received both introductory and subsequent, training from Messrs Dimitropoulos, Taba and Wilkins
(b)part of the initial training included receiving an Information Pack
(c)the Information Pack contained a 21 page “presentation” document (lodged by ASIC as document T 1541) that:-
(i) bore a logo, with the name “Heritage Financial Solutions”, at the top of each page
(ii) declared Heritage FSA to be a division of “Sunshine Pacific Corporation and Sunpac Finance”
(iii) described Heritage FSA as “SMSF specialists” and Sunpac as “investment property specialists”
(iv) outlined differences between retail super funds and self-managed superannuation funds
(v) summarised legislative changes permitting SMSF’s to “borrow to fund the acquisition of property”
(vi) highlighted suggested financial benefits of real property investment by SMSFs
(vii) highlighted Ipswich as the fastest growing area in Queensland, and South East Queensland generally, as the “second fastest growing region in the Western World”
(d)three further forms, all of which contained the name and logo to which I have referred. The three forms were:-
(i) a Client Authority Form (lodged as document T 1545), which contemplated completion by clients and the engagement of “Heritage Financial Solutions Pty Ltd” (Note:- not Heritage FSA) to establish a self-managed superannuation fund and debit the client’s credit card for the costs involved
(ii) an ABN registration information form (lodged as document T 1546) requesting “Heritage Financial Solutions” (Note:- not Heritage FSA) to register an ABN on the client’s behalf, and expressing an election to have a superannuation fund regulated under the Superannuation Industry (Supervision) Act 1993 (Cth)
(iii) a company registration request (lodged as T 1547), again directed to “Heritage Financial Solutions Pty Ltd” (rather than Heritage FSA) to establish a superannuation trustee company, and including at the end of the form a table intended to be completed with the client’s name and details of their existing superannuation fund and estimated membership balance.
(e)Also included in the Information Pack was a “Fact Finder” form (lodged as document T 1542), apparently intended to be used by “sales consultants” at client interviews. The form contained, amongst other things, the following questions:-
(i)if I could show you how to achieve your retirement income goal without costing you any more money than your spending now? Is this something that would interest you?
(ii)if I could arrange all the necessary paperwork and a suitable property would you take this further?
(f)Another document included the Information Pack was a single page form (lodged as document T 1543), in a similar format to the “Fact Finder”, and contemplating its completion by the insertion of the interviewed client’s particulars including the value of their assets and current debts. The form was not only headed with the HFS name and logo, but also included a footer with the same name, and listing the Thornleigh office address
(g)before each initial client meeting the sales consultants would collect a “presentation folder” from either Mr Taba or Mr Dimitropoulos. The folder contained the same kind of authority forms as those included in the Information Pack, and contract forms for house and land packages.
(h)during the client interviews the sales consultants would obtain details of the client’s financial position, including details of their current superannuation balances. Depending on the amount of those balances, the sales consultants would go through the “presentation” document, and the house and land contracts, with the client. Often clients would agree to the SMSF establishment and property purchase proposal during such an initial interview, and would complete the kind of authority forms described above.
(i)each of the sales consultants typically submitted their invoices to the Heritage FSA accounts person, often with a copy being sent to Mr Dimitropoulos’ apparent email address.
(j)each of the consultants make statements to the effect that Mr Dimitropoulos
(i)was frequently, indeed usually, present in the Thornleigh office,
(ii)frequently interacted with the Heritage FSA personnel,
(iii)commonly received reports from, and provided feedback to, sales consultants, about their client contact interviews
(iv)regularly received and sent email communications with Heritage FSA “sales consultants” about details of commission and bonus entitlements.
Arguably typical or characteristic of the communications relating to bonus and commission entitlements was a March 2012 email (apparently from Mr Dimitropoulos) which (i) formalised the commission and bonus entitlements for the period up to 28 February 2012, and (ii) announced a total $40,000 bonus for a minimum of 20 deals in the period between 28 February 2012 and 17 April 2012. Another email (again apparently from Mr Dimitropoulos) dated 16 May 2012, detailed a sales competition with a $50,000 bonus for the highest number of “sales over 18 sales”.
Some aspects of the content of the Information Pack referred to above as part of the training material provided to each of the sales consultants appear likely to be of significance in the review proceedings. This is particularly the case in relation to the appearance that the contents of at least some of the documents assertedly contained in the Information Pack might be taken to suggest the systematic use of documentation that conflated the identities of the various corporate entities that shared the Thornleigh office premises.
Other documents referred to in or annexed to, one or other of the sales consultants statements (and previously lodged with the Tribunal) include:-
(k)flyers, each bearing the same “Heritage Financial Solutions” logo and name to which I referred earlier, variously advertising a complimentary “information evening” about how to pay off your mortgage faster, and how to “use super to buy property”
(l)a business card, in the name of Mr Dimitropoulos, bearing the same “Heritage Financial Solutions” logo and name
(m)a document (lodged as T 1549) that is entitled HFSA Service Package, and headed “Guarantee of Performance”, which is apparently intended to be given to individual clients and again bears the “Heritage Financial Solutions” logo and name
(n)a document (lodged as T 1551) entitled “Asset Accumulator” which is again headed with the logo referred to above, but identifies itself as a standard form document belonging to Heritage FSA, and which Mr Dona says Mr Dimitropoulos distributed during a training session.
(o)a three page discussion of “Negative Gearing” in Australia (lodged as document T 1554), which is again headed with the HFS name and logo, but contains two different footers that variously identify it as a document published by Heritage FSA and HFS, again bearing the same logo, and said by Mr Dona to have been given to him by Mr Dimitropoulos during a training session
Overall, a preliminary and limited review of the contents of the three witness statements and their 250 annexures conveys the impression that the statements themselves predominantly contain factual assertions that rely on the documents and correspondence annexed to (or referred to in) the statements themselves. Those documents and correspondence items themselves appear to be contemporaneous and relate to the work each of the three witnesses understood themselves to be conducting as sales consultants for Heritage FSA. Furthermore, in so far as the respective witnesses remark on the fact of Mr Dimitropoulos’ involvement in their training, remuneration entitlements and payment, and their general management, what they say appears to be consistent with what I noted earlier about the content of Mr Dimitropoulos’ own statement:- see paragraph above. As I noted earlier, what Mr Dimitropoulos acknowledges in that statement, appears to lend itself (at least at a preliminary level) to characterisation as significant and regular involvement in those kinds of activities as part of the conduct of Heritage FSA’s business.
Such a preliminary potential characterisation neither heralds nor requires a conclusion adverse to Mr Dimitropoulos in relation to the adverse findings made by ASIC in the June 2017 decisions. Indeed, at least some of the documents and email communications included as annexures to the various statements (and already lodged with the Tribunal) can be viewed as having equivocal significance in relation to the actual level of Mr Dimitropoulos’ involvement and responsibility. One (non exhaustive) example of a communication perhaps in that category is an email exchange in February / March 2012 in which Mr Dimitropoulos is described as having said that all decisions about changes to commissions and bonuses are to be determined “at a remuneration committee meeting”. In a later (April 2012 email) Mr Dimitropoulos is recorded as reporting the most recent decision of the “Remuneration Committee”.
Various parts of the three witness statements include subjective statements about the significance of Mr Dimitropoulos’ involvement, and the witness’ understanding or characterisation of his status within Heritage FSA. But those subjective views are, on my present understanding and inclination, irrelevant and immaterial. It is Mr Dimitropoulos’ conduct, not the sales consultants’ views about it, that is the relevant consideration.
In the light of the above outline of the ASIC findings, my current understanding of the contents of the witness statements of Messrs Dona, Murphy and Naish, and the affidavits of Messrs Dimitropoulos and Taba, it is a significant oversimplification to say, as Mr Dimitropoulos’ current submissions asserted, that the factual basis for the substance of the adverse findings in the June 2017 decisions is based on what Messrs Dona, Murphy and Naish have to say. The more accurate position seems to be, according to my present understanding, that the factual basis for findings of those kinds, is to be derived from Sunpac and Heritage FSA’s business records – some of which are included in the annexures to the three witness statements. According to the preliminary understanding I have derived (from the matters I have summarised above) I am far from satisfied that the “credit” of any of the three witnesses – irrespective of whether that term primarily bears connotations of honesty or reliability – is likely to be significantly informative in the resolution of the review proceedings.
THE SUBMISSIONS SUPPORTING THE LODGMENT ARGUMENT
Notwithstanding my current impression it is very unlikely that the “credit” of Messrs Dona, Murphy and Naish will be an informative consideration in the review proceedings, Mr Dimitropoulos sought to support the lodgement application by relying on a number of authorities, most of which addressed court and tribunal practices in relation to the production and inspection of documents sought by a summons or subpoena process.
The first of the cases on which the submissions relied was Mackintosh v The Commissioner of Police (NSW) [2010] NSWSC 1064. Mr Mackintosh had been charged with two domestic violence offences, but alleged that the complainant and her sister had fabricated the prosecution evidence. In Local Court proceedings he had issued a subpoena for the production of the criminal history of, police incident reports relating to, and any apprehended violence orders relating to, the alleged victim and her sister. The parts of the subpoena relating to the victim’s sister had been set aside, on the basis of a supposed rule of law that no subpoena could be issued to a crown witness other than the informant. That supposition involved an error of law and was the subject of a successful Supreme Court appeal that resulted in the subpoena decision being remitted to the Local Court. In paragraph [5] of his reasons for judgment in the Supreme Court, and in a passage which Mr Dimitropoulos’ submissions emphasised, Hoeben J endorsed the proposition that a production subpoena was not objectionable merely because it sought documents that only related to the credit of a witness. However, Hoeben J also regarded as uncontentious the propositions that (i) the party supporting a contentious production subpoena must be able “to state clearly and precisely the legitimate forensic purpose for which the subpoena was issued” and, (ii) it must be “on the cards” that the documents would materially assist the requesting party’s case.
The general potential permissibility of a request for the production of documents relating to credit, and the overriding limitations requiring both relevant precision and an “on the cards” prospect of material assistance, involve an element of tension. Other parts of Hoeben J’s reasons for decision provide some informative background about the reasoning and evaluative process appropriately involved in resolving that tension. Without making any final ruling (because the appeal was limited to a question of law) His Honour accepted that there was sufficient evidence to suggest it was “on the cards” that the sister had a criminal record. But His Honour doubted that there was any legitimate forensic purpose in the unlimited request for the production of all apprehended violence orders and all police incident reports relating to the sister. The approach His Honour seems to have taken is that records of the sister’s prior convictions could provide a basis for a general attack on her credit, but that there was no basis for permitting access to the other documents.
The next case on which Mr Dimitropoulos’ submissions relied was Taylor v O’Neill [2012] NSWSC 626. The underlying background to that decision was the plaintiff’s allegation that she had a legitimate claim on the estate of her deceased de facto partner, and had been misadvised to the contrary by her former solicitor. She unsuccessfully sought to set aside a subpoena that had been issued to the Commissioner of Police seeking the “complete file” relating to herself and to her deceased partner. The background to that request was the evidence that both the plaintiff and the partner had a long history of illicit drug use, and the possibility that their respective “complete file” might reveal both numerous offences (including offences of dishonesty) and periods of incarceration (which might be inconsistent with the existence of an ongoing domestic relationship).
In refusing to set aside the subpoena McCallum J declared (at [24]) her satisfaction that the documents sought were “capable of providing a legitimate basis for cross-examination in the proceedings”. Her Honour considered that the nature of the issues raised provided a “reasonable basis” for thinking that the documents would “likely add in some way to the relevant evidence in the case”.
The “add in some way to the evidence” criterion derives from what was said in National Employers Mutual General Insurance Association v Waind [1978] 1 NSWLR 372 at 384 and from the “throw light on the issues” expression expressed in Trade Practices Commission v Arnotts Ltd (1989) 21 FCR 306. In A v Z [2007] NSWSC 899; (2007) 212 FCR 255 Brereton J had discussed those decisions and concluded (at [4]) that the relevant criterion for the legitimacy of a production subpoena was whether or not the documents sought were likely “to add, in the end, in some way or another, to the relevant evidence in the case”. That criterion was less restrictive than a requirement for satisfaction that the material sought would “materially assist the case of the issuing party”. In a later passage (at [19]) Brereton J indicated his view of the width of that criterion when he re-expressed it as posing a classification dichotomy between documents that (i) could legitimately be sought because they were “apparently relevant or capable of providing a legitimate basis for cross examination” and, (ii) were “manifestly irrelevant and incapable of touching matters of credit”.
Brereton J then applied that criterion in relation to a subpoena that sought a considerable number of documents, including the criminal history of Z. The contest arose in the context of a disputed written loan agreement that was said to constitute an equitable mortgage over land owned by Z. Whilst Z disputed the loan transaction, and contended that A had contributed the money to a joint enterprise in acquiring and supplying illicit drugs, A contended that the written agreement had been lost when his home had been completely destroyed by fire in an arson attack for which Z’s reputed accomplice had been convicted. A contended that Z, who had apparently been granted immunity, had been a participant in the arson attack.
The circumstances in A v Z were obviously quite unusual, and Brereton J took an expansive view of the permissible scope of the contentious subpoena. His Honour accepted that it was relevant for A to be able to show that his house had been destroyed (a matter which hardly required any of the contentious documents) and that Z was implicated in the arson, irrespective of whether or not A could show that Z’s conduct was motivated by a desire to destroy the asserted written loan agreement. Brereton J ultimately put the relevant criterion (at [31]) as whether or not “there is a reasonable basis for supposing that the document may tend to show that the defendant was involved – or, as I would put it, simply throw light on whether or not the plaintiff was involved”.
A third case on which Mr Dimitropoulos submissions relied was Senanayake v Migration Registration Authority [2019] AATA 225. The summons controversy in that case was about the legitimate purpose of a request for the production of the movement records of two clients of a migration agent whose registration had been cancelled. The agent contended that the cancellation decision was based on false information contained in the client’s complaints to the registration authority. In addressing the summons controversy, and ultimately upholding the summons request, DP Cowdroy formulated the following principles:-
It was not a legitimate forensic purpose to seek the production of documents solely because of their capacity to impugn the credit of a witness:- at [14] – citing Bird and Military Rehabilitation and Compensation Commission [2006] AATA 109; (2006) 91 ALD 691
(b)Neither is it a legitimate summons purpose to “trawl for documents which may be used to impugn the credit of a witness”. The production purpose must be identifiable and the production sought must be “likely to facilitate the conduct of the proceedings”:- referring to Jack Brabham Engines Ltd v Beare [2010] FCA 35 at [29] & [30].
(c)Summons production may be appropriate where the documents sought “could possibly throw light on” the issues for determination:- at [14]-[15] – citing Trade Practices Commission v Arnotts Ltd (1989) 88 ALR 90 at 103; Dorajay Pty Ltd v Aristocrat Leisure Ltd [2005] FCA 588 at [17]; Cosco Holdings Pty Ltd v Federal Commissioner of Taxation [1997] FCA 1504
(d)The capacity of documents to “throw light” on the material issues was to be determined on the basis of reasonable expectation, having regard to the description or identification of the documents sought, rather than actual knowledge of the contents of the documents:- at [15] & [20] citing Dorajay Pty Ltd v Aristocrat Leisure Ltd [2005] FCA 588 at [17]; Cosco Holdings Pty Ltd v Federal Commissioner of Taxation [1997] FCA 1504; Brand v Digi-Tech (Australia) Ltd [2001] NSWSC 425 at [36].
(e)The weight of authority favoured the permissibility of a summons seeking the production of documents that were to be used solely for the purpose of impeaching the credit of a witness:- at [17] – citing Fried v National Australia Bank Ltd [2000] FCA 911; (2000) 175 ALR 194; Jack Brabham Engines Ltd v Beare [2010] FCA 35 at [12].
There is a significant apparent inconsistency between the first and last of the principles summarised in the preceding paragraph. Its resolution is likely to be critical in the resolution of any particular summons production controversy. In Senanayake itself DP Cowdroy’s reasons for decision accepted that it was “possible” the contentious documents would advantage the review applicant. But nothing in the reasons explicitly identified the factual basis for either the possibility or the acceptance. It seems likely however, that the movement records were thought likely to provide an authoritative record of the timing and duration of the complaining clients’ presence in Australia, and hence likely to be directly relevant to the substance of their complaints. That likelihood, and the absence of explicit reasoning for upholding the summons, suggests the need for caution, and restraint from uncritical acceptance of the proposition that a mere and general “possibility” documents may advantage the requesting party (or “throw light” on the matter) is sufficient to demonstrate the propriety of the production request.
Re Bird v Military Rehabilitation and Compensation Commission [2006] AATA 109; (2006) 91 ALD 691 was a matter where the applicant sought compensation for incidents that he claimed, and the Commission disputed, had occurred in East Timor and had been observed by another servicemen. The contentious production request related to the service records of that, and another, serviceman, both of whom were witnesses in the review proceedings. In setting aside the summons the Tribunal at one stage stated that a production request made solely for the purpose of impeaching the credit of a witness was impermissible. However that proposition is an obvious generality, and one of debatable accuracy (see paragraph 43(e) above), that deflects attention away from the underlying reason why, and the extent to which, the credit of the witness may be material to the proceedings. In any event, the Tribunal did not set aside the summons. Rather, after conceding a “possibility” that some of the documents sought might be relevantly illuminating, the Tribunal (at [26] & [27]) was not satisfied there was any reasonable likelihood that the contents of the documents would assist in the determination of the issues in the proceedings.
The decision in Trade Practices Commission v Arnotts Ltd (1989) 21 FCR 306; 88 ALR 90 at 102–3; (1989) 88 ALR 90, which appears to be the principal source of the “throw light” criterion involved a request (addressed to Mattingly, another party to the proceedings) to produce all notes of telephone conversations, file notes, or other documents recording the receipt or “parting with possession” of any documents referring to the proposed marketing or importing of biscuits in / into Australia. In dealing with the contest Beaumont J noted (by reference to observations of Lord Denning in Senior v Holdsworth; ex parte Independent Television News Ltd [1976] 1 QB 23 at 34) that a mere assertion a document may contain relevant content, was insufficient to require its production. But His Honour also noted Arnott’s contention that, notwithstanding the considerable width of their subpoena description, the documents sought could reasonably be expected to “throw light” on two substantive issues in the proceedings:- (i) the extent of the relevant biscuit market and, (ii) the extent of Arnott’s influence on that market. His Honour then went on to describe as “well settled” the test for resolving the production contest. He did so in these terms:-
The general test for present purposes is well settled. The issue of a subpoena will be an abuse of process if it is not used for a legitimate forensic purpose: see Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98 at 100-1. But, as Deane and Gaudron JJ observed in Hamilton v Oades (1989) 85 ALR 1 at 11, the court's general powers in this area have a dual aspect: “The inherent power of a court to control and supervise proceedings includes the power to take appropriate action to prevent injustice … [This] power … is not restricted to defined and closed categories … In this context injustice is not simply a question of the purpose or motive for which the relevant proceedings were instituted but includes a consideration of the consequences of the proceedings for the person invoking the power. The terms ‘oppressive’ and ‘vexatious’ are often used to signify those considerations which justify the exercise of the power to control proceedings to prevent injustice, those terms respectively conveying, in appropriate context, the meaning that the proceedings are ‘seriously and unfairly burdensome, prejudicial or damaging’ and ‘productive of serious and unjustified trouble and harassment’”: Oceanic Sun Line Special Shipping Co Inc v Fay(1988) 62 ALJR 389 at 411; 79 ALR 9 at 45 per Deane J.
In other words, the present inquiry is not limited to an analysis of the true purpose of Arnotts in procuring the issue of the subpoena. It is also material to look at the impact of the subpoena upon Mattingly.
Without restricting this inquiry, it is convenient to address the present application in the first instance by reference to two questions:
(1) Does the material sought have an apparent relevance to the issues in the principal proceedings, ie, is adjectival, as distinct from substantive, relevance established? Does the subpoena have a legitimate forensic purpose to this extent? This involves a consideration of the matter from the standpoint of Arnotts.
(2)Is the subpoena seriously and unfairly burdensome or prejudicial? This is to look at the matter from the point of view of Mattingly.
It is readily apparent from the later parts of Beaumont J’s reasoning that he proceeded on the basis of the likelihood that documents potentially answering at least part of the requested description did exist. It is also apparent that, in so far as the description included documents referring to the removal of (otherwise sought) documents from Australia, His Honour proceeded on the basis of an assumption that such documents existed. That latter assumption was no doubt fostered by the nature of Mattingly’s opposition to that aspect of the subpoena, which was that the response would tend to incriminate it, rather than that there were no such documents.
The “add in some way” criterion apparently derives from National Employers Mutual General Insurance Association v Waind [1978] 1 NSWLR 372 at 384. Having been injured in a car accident Mr Waind both claimed on workers’ compensation insurance and brought proceedings for common law damages against the driver of the other car. In those proceedings Mr Waind sought to set aside a subpoena requiring production of his workers’ compensation claim file relating to the accident. (It is apparent from the decision that the file contained Mr Waind’s signed statement – see [1978] 1 NSWLR at 381.) The NSW Court of Appeal rejected that application and, in so doing, the underlying argument that production could only be sought for the purpose of obtaining documents that were both admissible and intended to be tendered in the proceedings. (At the same time, the Court of Appeal emphasised that the court had a residual discretion – directed at aiding the proper resolution of the issues in the proceedings – to control the use and disclosure of documents produced in response to a subpoena – see especially 378-9 citing Burchard v Macfarlane [1891] 2 QB 241 and also at 381 (referring to the “second step”).)
In Waind Moffitt P described one basis for objection to a subpoena was that it imposed on the recipient an impermissible obligation to determine the relevance of the documents to the issues in the proceedings. (This general impermissibility identifies a striking, but rarely remarked upon, distinction between summons and subpoena production issues, and the lodgement power in AAT Act s 37(2). The distinction is that the lodgement power is only exercisable against the decision maker, and the decision maker has a statutory obligation to lodge “relevant” documents:- see AAT Act ss 37(1)(b) & 38AA(1) and paragraph 8 above.) However Moffitt P endorsed (at 382) the potential permissibility of a subpoena that sought documents described in general terms, even if the actual existence of any documents answering that description was unknown to the requesting party. Moffitt P went on to contemplate that a subpoena might be impermissible if it required compliance what was unduly burdensome or apparently for a collateral or private purpose (at 382). But the learned President’s reasons for judgment did not attempt to prescribe, or express in precise terms, the limits of the permissible use of a subpoena. Moreover, Moffitt P also emphasised that the court retained control of the documents produced, and had a discretion about the extent to which they were disclosed, including to the requesting party. His Honour variously described that control as one involving a discretion to permit the use of the documents “in such a way as … will aid a proper decision of the issues between the parties, by facilitating the elucidation of the truth in respect of the relevant facts” (at 383) and to “take all steps necessary for the proper trial of the issues”. His Honour then said (at 384):-
So far as factual matters are concerned, the proper conduct of the litigation can only be that which fairly leads to the introduction of all such evidence as is material to the issues to be tried, and the testing of that evidence by the accepted procedures of the court. The only legitimate purpose of requiring the production, and permitting the inspection, of a stranger's documents can be to add, in the end, to the relevant evidence in the case.”
Later (at 385) Moffitt P described the crucial question in relation to the discretion to permit inspection was “whether the documents have apparent relevance to the issues.”
The decision in Dorajay Pty Ltd v Aristocrat Leisure Ltd [2005] FCA 588, another case on which Mr Dimitropoulos’ submissions relied, involved representative proceedings under Part IVA of the Federal Court of Australia Act 1976 (Cth) and, more particularly, the propriety of the criteria for group membership. (The criteria included entry into agreements with a litigation funder.) The presently relevant controversy involved a subpoena that required production of (i) every funding agreement (as distinct from each different type of agreement), (ii) all funding negotiations and documents relating to the funding actually provided and, (iii) all communications between the litigation funders and the group members about the commencement, timing and conduct of the proceedings.
In addressing the subpoena controversy, Stone J referred (at [16]) to Beaumont J’s summary of the “well settled” general test in Arnotts Ltd. But Her Honour also relied on the views of Cantor J in R v Barton [1981] 2 NSWLR 414 at 419 – that Moffit P’s discussion in Waind was not intended to exhaust the grounds on which a production subpoena could be set aside, and that the essential task involved was that of balancing the competing interests relating to the contentious documents and their disclosure.
Her Honour then continued:-
[17] The general principles and the test of adjectival or apparent relevance propounded by Beaumont J have been applied or cited with approval in numerous cases including: Cosco Holdings Pty Ltd v Commissioner for Taxation [1997] FCA 1504 (‘Cosco’); Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd [1998] FCA 1599; Marsden v Amalgamated Television Services Pty Ltd [1999] NSWSC 619 at [393]-[394]; Pasini v Vanstone [1999] FCA 1271 at [31]; and Chapman v Luminis Pty Ltd [2001] FCA 1580. A similar view was expressed in Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 at 927 where Waddell J, following Waind, summarised the views of Moffitt P in that case saying that whether subpoenas are oppressive or an abuse of process depends on whether ‘it is reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case’. A similar approach was adopted by Spender J in Cosco when his Honour, having quoted Beaumont J’s test of ‘adjectival relevance’ (see [16] above), commented:
Notwithstanding the use of the word “possibly” in this paragraph, in my opinion, that word is not used in any speculative sense. I take his Honour’s conclusion expressed in that paragraph as an acquiescence to the correctness of the submission that the material sought could reasonably be expected to throw light on some of the issues in the principal proceedings. It is not a question of looking at the documents to see if the documents might permit a case to be made.
[18] These authorities show that the criteria by which one determines whether a subpoena should be set aside, in whole or in part, may be expressed in different ways but ultimately, they all come down to whether such action is required to prevent an abuse of the processes of the court to prevent injustice. As Deane and Gaudron JJ recognised in the comments quoted by Beaumont J (see [16] above), various terms may be used in focusing these concerns on the circumstances of a particular case. In this case, whether the documents are relevant (in the sense used by Beaumont J) will determine the issue provided that the requirements of the subpoena are not otherwise oppressive.
The distinction between the typical situations in which document production and inspection contentions may arise in connection with summons / subpoena disputes on the one hand, and additional lodgement disputes on the other, does not detract from the proposition, accepted in previous decisions of this Tribunal and the Federal Court of Australia, that the concept of relevance, for the purposes of AAT Act s 37(1) and 37(2) must be regarded as having an “expansive connotation” and one of “permissive generality”:- see Re KLGL and QCYY and Australian Prudential Regulation Authority [2008] AATA 452 at [17] & [46]; VMQD v Federal Commissioner of Taxation [2018] AATA 3147 at [11] & [17] to [20]. However, the criterion necessary to enliven the discretion to require a decision maker to lodge additional documents is that of an actual opinion that the documents “may be relevant”.
The decision in Kennedy v Administrative Appeals Tribunal (2008) 168 FCR 566 emphasises that the complementary production discretion conferred by AAT Act s 37(2) requires that the Tribunal’s opinion of the potential relevance of the contentious documents be based on a rationally articulated connection between the documents sought and the matters required to be determined in the review proceedings. Moreover, that potential relevance must be directed at the capacity of the documents, given the postulated connection, “to influence the determination of the proceedings”:- Re KLGL and QCYY and Australian Prudential Regulation Authority [2008] AATA 452 at [17] & [18]. It is not enough that the postulated documents merely have a connection with or pertain to the subject matter of the proceedings. The purposive connection required is, in my view, reflected in the synthesis expressed in Wong v Sklavos, and to which I referred earlier in these reasons:- see paragraph 60 above. The essence of that synthesis is the idea of realistic and reasonable expectation of material assistance in the process of determining the proceedings. Conclusions about whether the circumstances conduce to, or require, the threshold opinion required by AAT Act s 37(2) (or the analogous summons / subpoena criterion) must necessarily be impressionistic, and different minds may come to different conclusions – as the remarks of Pembroke J in Thomas v SMP suggest:- see paragraph 79 above.
The potential significance of the difference between mere connection and the purposive potential relevance involved in the AAT Act s 37(2) discretion is illustrated by the decision in Re Cash World Gold Buyers and Commissioner of Taxation [2017] AATA 736. In that case the objecting taxpayer had obtained a schedule of documents from the Commissioner, in response to an FOI request for (i) documents “evidencing” the review involved in the objection decision, (ii) drafts of any review related determinations and, (iii) documents the Commissioner intended to rely on. The taxpayer relied on the schedule to contend that all the documents in the schedule met the “may be relevant” criterion and should be produced. The contention involved propositions that (i) the FOI response itself indicated that the documents were related to the assessment, (ii) the fact that some of the documents had been compulsorily obtained by the Commissioner for the purposes of his audit itself bespoke their relevance, (iii) the entire background to the Commissioner’s audit process, including internal ATO communications about the audit and assessment, must be relevant.
Two matters were of principal significance in rejecting the application. The first was the potential relevance of the disparate categories of documents to the “taxable facts” concept at the heart of the assessment and review process. The second was the quality and sufficiency of the suggested relevance of particular documents. In relation to the first matter, after referring to Kennedy and Re KLGL and QCYY, Senior Member Lazanas said:-
[26] It is significant to note that s 37(2) is not a general discovery provision, nor does it authorise a “fishing expedition” … the words “may be relevant” in s 37(2) are to be interpreted to mean whether a document “could reasonably be expected to throw light on some of the issues in the principal proceedings” …. The test is not satisfied where a document only bears some correlation with the subject matter of, or evidence or issues in, the review proceedings: Re EME Productions No 1 Pty Ltd and Screen Australia [2010] AATA 839 at [17]; and Re KLGL at [17]. On the other hand, the test of “may be relevant” should not be interpreted to mean “is relevant”. In other words, the Tribunal must engage in a limited forensic exercise to determine whether a document “may be relevant” to the issues in the proceedings before making a direction under s 37(2). It cannot simply accept bare and unsupported assertions about the relevance of documents.
It is clear from the following passages of the reasons in Cash World that Senior Member Lazanas did not regard either the fact that documents had been required for, or were involved in, the decision maker’s audit process as sufficient to demonstrate their potential relevance. More precise identification of the nature and purpose of the contentious additional documents was required. That greater degree of precision could come from the apparent subject matter of particular documents. That possibility was the second of the matters Senior Member Lazanas addressed, specifically in relation to transcripts of interviews with particular individuals. Explaining the reason for refusing to require their production Senior Member Lazanas said:-
[31] I … am satisfied that the documents that Cash World has identified and is seeking a direction in relation to, will not shed light on the issues before the Tribunal. I had some reservations with respect to the transcripts of interviews of approximately a dozen named persons that were referenced in the schedules but, as Cash World did not offer any explanation as to how the transcripts of the named persons may be relevant, including as to what were their roles and involvement, I am not prepared to speculate as to the utility of those documents for the review proceedings. …
In the absence of a clearly articulated, rather than essentially speculative, basis for the potential relevance of the contentious documents, it is permissible for the Tribunal to take into account the decision maker’s mandatory obligation, under AAT Act s 37(1)(b) (and AAT Act s 38AA) to lodge documents that are objectively relevant. The Tribunal’s assessment of the likelihood the decision maker has complied with that obligation may contribute to the formation of the Tribunal’s own opinion about the potential relevance of the contentious documents. In addition, the Tribunal’s assessment of the likelihood of the decision maker’s future compliance with that obligation may influence the exercise of the residual discretion to require lodgement. One reason for that permissibility is the existence of the explicit statutory obligation. Another is the decision maker’s status as a party to the proceedings, and their explicit statutory obligation to use their “best endeavours to assist the Tribunal to make its decision”:- see AAT Act s 33(1AA). A third consideration is the expectation, certainly where the decision maker is part of the executive government, that they will participate in the proceedings as a model litigant.
The existence of those various obligations of a decision maker does not mean that in considering the exercise of the notice requirement power in AAT Act s 37(2) the Tribunal ought, or even may, defer to the decision maker’s assessment of relevance. The formation of the threshold opinion, and the exercise of the discretion, must be informed by the nature of the documents, information about whether the decision maker is actually aware of the existence and content of the documents, the asserted basis of their potential relevance to the review, the Tribunal’s evaluation of that asserted basis, and the reasons for the decision maker’s opposition to the production sought.
In the present case, ASIC’s July 2018 response to the FOI request indicates that it has identified the documents sought and has made a considered decision that they attract legal professional privilege. It necessarily follows that ASIC knows the contents of the documents. It is an available inference that, aware of the contents of the documents, and of the nature of its production obligation, ASIC has made a considered decision that the documents are not in fact relevant to the review of the decision. That inference is not determinative. Neither is it the only one that is open, because in the present application ASIC has advanced other reasons for its opposition to the lodgement of the contentious documents. Those other reasons particularly include the proposition that only documents actually considered by the decision maker could fall within the category of potential relevance, and that proposition is without substance:- see paragraphs 69 to 75 above. I would also characterise as without substance ASIC’s further objection that absence of authorship or express adoption by the particular witness necessarily precludes a positive opinion about the potential relevance of a document. Once those grounds of opposition to production are removed, the obligations to which I have referred would require ASIC, if it has not already done so, to review the documents and assess their actual relevance.
But in the present matter the potential relevance of the contentious documents has been raised, as ASIC contends, at a level of uninformative generality. The known details of the documents (as outlined in the Schedule to these reasons) indicate that they are typically brief in their contents, and certainly significantly shorter than the final statements that have been lodged by ASIC. It is inherently likely that the final statements, apparently resulting from a series of instructions over a period of time, contain the most comprehensive and detailed content of the considered recollection of each witness. There is nothing but speculation to influence favourably any expectation that their contents may be informative in the determination of the review proceedings.
In particular, there is no articulated reason to anticipate that any of the contentious documents contains material inconsistencies, contradictions or omissions that have a realistic and reasonable potential to influence the determination of the review proceedings. I am of that view, essentially because of the generality of the asserted potential relevance of the documents, even without regard to what I have recorded earlier as my preliminary view about the doubtful materiality of the “credit” of any of the three witnesses. That preliminary view provides an additional reason why I do not hold the opinion that the documents “may be relevant”. Furthermore, I do not accept the submission made on Mr Dimitropoulos’ behalf that any examination transcript relating to the three witnesses would necessarily have been “relevant” or at least potentially relevant, and obliged to have been lodged. The accuracy of that proposition must depend on whether or not the witness has provided a final or formal statement that has been lodged, and, if so, whether the statement differs to any informative extent, from the content of the examination transcript.
Even if I had been of the opinion that the documents identified in the Schedule “may be relevant” (in the sense contended for by Mr Dimitropoulos) I would not (at this stage of the proceedings) have exercised the residual discretion to order their lodgement. I would not have done so for three reasons. Those reasons are (i) my preliminary view about the doubtful (indeed unlikely) significance of the “credit” of the three witnesses to the determination of the review proceedings, (ii) the generality of the basis for the contended potential relevance of the documents and, (iii) my expectation that to the extent that it has not already done so, ASIC will assess the relevance of the documents with proper regard to its obligations under AAT Act s 37(1)(b) and without being influenced either by the grounds of production objection that I have rejected earlier in these reasons, or claims of legal professional privilege.
In relation to the latter expectation, nothing I have said should be taken to detract from the proposition that if the documents in fact contain inconsistent (or other) statements that bear on the accuracy or reliability of the contents of the witness statements lodged, that information ought be taken into account in any assessment by ASIC as to whether or not the documents are objectively “relevant”. If the documents are objectively relevant, they are required to be lodged with the Tribunal in accordance with the statutory obligation imposed by AAT Act s 37(1)(b).
DECISION
Mr Dimitropoulos’ application for a notice requiring ASIC to lodge the additional documents (i.e., those referred to in the Schedule to these reasons), is refused.
I certify that the preceding 93 (ninety-three) paragraphs are a true copy of the reasons for the decision herein of Mr P W Taylor SC, Senior Member
............................[SGD]............................................
Associate
Dated: 10 July 2019
Date(s) of hearing: 28 June 2019 Counsel for the Applicant: A Munro, Barrister Solicitors for the Applicant: S Young, Mills Oakley Counsel for the Respondent: J Halley SC
S Cleary, Barrister
Solicitors for the Respondent: J Walker, Australian Security and Investments Commission
Schedule:- ASIC file notes and "T document" witness statements –
Dona, Murphy and Naish
Count Witness Date Document Pages Paragraphs Annexures 1 Dona 29-Oct-15 ASIC file note 6 ? ? 2 Dona 6-Nov-15 Draft statement 6 ? ? 3 Dona 8-Nov-15 ASIC file note 1 ? ? 4 Dona 13-Nov-15 ASIC file note 8 ? ? 5 Dona 20-Nov-15 ASIC file note 3 ? ? 6 Dona 24-Nov-15 ASIC file note 1 ? ? 7 Dona Undated ASIC file note 26 ? ? T 33 Dona 12-Dec-16 Statement 33 110 T 1540 to 1639 Annexures 139 8 Murphy 30-Oct-14 ASIC file note 13 ? ? 9 Murphy 10-Nov-14 ASIC file note 10 ? ? 10 Murphy 27-Jan-15 ASIC file note 1 ? ? 11 Murphy 1-Apr-15 ASIC file note 12 ? ? 12 Murphy 16-Apr-15 ASIC file note 1 ? ? 13 Murphy 29-Apr-15 ASIC file note 1 ? ? 14 Murphy 15-May-15 ASIC file note 1 ? ? 15 Murphy 3-Jun-15 ASIC file note 1 ? ? 16 Murphy Undated ASIC file note 2 ? ? T 31 Murphy 19-Nov-15 Statement 77 259 T 1210 to 1437 107 18 Naish 30-Oct-14 ASIC file note 5 ? ? 18 Naish 5-Nov-15 ASIC file note 6 ? ? 19 Naish 31-Mar-15 ASIC file note 1 ? ? 20 Naish 21-Jan-15 ASIC file note 6 ? ? T 34 Naish 2-May-16 Statement 20 90 T 1640 to 1649 7
4
27
0