Douglas and Australian Securities and Investments Commission

[2022] AATA 3914

Douglas and Australian Securities and Investments Commission [2022] AATA 3914 (28 October 2022)

Division:GENERAL DIVISION

File Number(s):      2022/4716

Re:Donald Douglas

APPLICANT

AndAustralian Securities and Investments Commission

RESPONDENT

Decision

Tribunal:Mr P W Taylor SC, Senior Member

Date:28 October 2022

Date of written reasons:        21 November 2022

Place:Sydney

Application dismissed

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Mr P W Taylor SC, Senior Member

Catchwords

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION – Non-compliance –  non-compliance with directions - reinstatement of application – statutory interpretation – application dismissed    

Legislation

Administrative Appeals Tribunal Act

REASONS FOR DECISION

Mr P W Taylor SC, Senior Member

21 November 2022

1. These proceedings were initiated by an application of 7 June 2022 and they relate in substance to the review of what was, although this is not procedurally quite correct, but what was ASIC’s substantive decision of 24 February 2022 to remove Mr Douglas’s registration as a superannuation fund auditor.

2. The proceedings have been the subject of numerous directions hearings and also fixtures for the substantive hearing of the application.  The detailed history is set out, with some exceptions, in a statement of Mr Paciocco dated 28 October 2022.  That statement was provided in response to a direction, which I in effect made (although it was expressed as merely a foreshadowing of a direction), in an email I sent to the parties on 25 October 2022.

3. I sent that email as a result of the apparent non-compliance by the Applicant with directions that I had made on 13 September 2022.  Those directions, as is readily apparent from the content of Mr Paciocco’s statement of 28 October 2022, were effectively the last stage, or the most recent stage until the present time, of the Applicant’s, if I may so, chronic non-compliance with numerous directions that I have made for the conduct of these proceedings.

4. In the email of 25 October, I noted that the Applicant had failed to comply with the directions of 13 September 2022.  That non-compliance was quite considerable, in the sense that the directions of 13 September 2022 required the Applicant to provide all his additional supporting material by 30 September 2022.  As at 25 October 2022 nothing had been provided by the Applicant, no communication (that I am aware of) had occurred between the Applicant and the Tribunal or the Applicant and ASIC, and no explanation of any kind had been provided for what was both a significant non-compliance and a serious non-compliance having regard to the previous history of the matter.

5. That was why on 25 October 2022 in the email I caused to be sent to the parties I indicated that I would require the Applicant either to fully comply with the previous directions by 5 pm on 27 October 2022, or to seek an application for extension of time and/or adjournment of the hearing.  Any such application was to be made and supported with evidence and submissions to be provided to the Tribunal and the Respondent by 5 pm on 27 October 2022.  The content of my email indicated that that was my inclination, which was expressed to be subject of the party’s views, submissions or explanations.

6. Nothing was received by the Tribunal in response to that indication other than (i) Mr Paciocco’s statement (which was provided to me on 28 October 2022) and, (ii) an email sent by Ms Ardelean, who appears for Mr Douglas, at 4.01 pm 27 October 2022.  That email consisted of two sentences only.  First:

   We apologise for any delays

   And secondly:

   We seek an extension of time for compliance and adjournment of the hearing.

7. No explanation was provided for the delay.  No submissions were made in support of the application for extension of time.  No evidence was provided in support of the application for an extension of time.  And even today no explanation was provided either for the non-compliance with the directions of 13 September or for the failure to comply or even respond (other than with the two sentences in the email) to the email that I had caused to be sent on 25 October 2022.

8. Ms Ardelean in the course of interchange with me in the course of this directions hearing indicated that perhaps she had failed to understand exactly what was required by the contents of my email of 25 October 2022. I have to say, without intending any criticism of a personal nature, that Ms Ardelean’s responses are completely inadequate and it is completely inconsistent with the Tribunal’s mandate under section 2A of the Administrative Appeals Tribunal Act to allow these proceedings to continue in the light of the Applicant’s chronic and repeated non-compliance with directions.  In particular non-compliance with the directions of 13 September 2022 after the sad history of non-compliance in relation to previous directions of the Tribunal.

9. The factual matters set out in Mr Paciocco statement, which should be regarded as an annexure to these reasons in due course, are not contested by Ms Ardelean in any respect.  I inquired of her in the course of the exchange in this directions hearing as to whether or not she had received the statement, a proposition which she confirmed.  And I invited her to express any disagreement with any of the factual matters stated.  She indicated there was no contest about any of those factual matters although she did add that, insofar as Mr Paciocco indicated that he had had previous email exchanges or inquiries of the Applicant’s solicitors, Ms Ardelean said she could not recall precisely when the last of the email contacts was that she had received from ASIC and/or Mr Paciocco. 

10. That qualification is, I think, essentially immaterial.  The fact remains that the Applicant has been on notice of the directions required on 13 September 2022 and has neither complied nor provided any explanation for the continued non-compliance other than, in the course of the submissions today, an indication that there was some difficulty of communication with Mr Douglas.

11. I would only add to the material set out in Mr Paciocco’s statement some details that flesh out the material in paragraphs 11, 12 and 13 of his statement.  Paragraph 11 records the fact of the Tribunal’s decision on Mr Douglas’s stay application.  In the course of writing the reasons for the stay decision I alluded in paragraphs 30(a) and 32 to what occurred to me as potential shortcomings in the available evidence, and I indicated the possibility (having regard to the limited nature of the material that had been provided, as I then regarded it) that Mr Douglas may be able to provide some additional material that would flesh out some of the underlying factual circumstances.

12. The only material that has been provided since then consisted of these (following) matters.

13. Mr Douglas’s 31 July 2022 affidavit, which I have read, but which I, on my preliminary understanding of it, do not regard it as taking the available material substantially further than that of which I was aware at the time I wrote the stay decision.

14. Included with the material or perhaps in addition to the material contained in Mr Douglas’s 31 July 2022 affidavit I note that the Tribunal has also had lodged with it some superannuation fund deeds for the three funds that were the subject of criticism in ASIC’s original and internal review decision.  So far as I am presently aware that is the only additional material that has come from the Applicant, despite the indication that I had made in the stay decision at paragraphs 30A and 32.

15. On the other hand, ASIC provided on 17 August 2022 a number of supplementary documents, supplementary section 37 documents, whose provision was likely prompted by the suggestions I had made (or at least alluded to) in the stay decision.

16. Thereafter, on 31 August 2022 the Respondent provided its statement of facts, issues and contentions.  The relevance of that material is that all of the documents that I had suggested might be available and that the parties wished to rely upon appear to have been provided well before the directions hearing on 13 September 2022.  The Applicant, therefore, was fully aware of the material that was potentially for consideration by the Tribunal.

17. And an additional significant matter is that in the directions hearing of 13 September 2022 I required the Applicant to respond specifically to some particular questions that I had previously raised - indicating the need, as I saw it, for some greater precision in identifying exactly what the factual ambit of dispute was in the review proceedings.

18. The relevant part of the directions on 13 September 2022 was a reference back to some questions I had raised in correspondence that I caused to be sent to the parties on 5 September 2022.  The directions included a requirement for a response to those questions I had asked, and the provision of any additional material relied upon by the Applicant.  Thirdly, a requirement that any submissions be specifically cross-referenced to the underlying evidence relied upon to substantiate any factual assertions raised in the submissions.  And then finally, a specific response to the audit deficiencies identified in the ASIC reasons for decision.  In particular I suggested that the appropriate form of submissions would be an annotated version of the schedule that I had included in my decision of 1 August 2022 on the Applicant’s stay decision.

19. I raised all of those matters to indicate my view that the Applicant has been encouraged both in the previous directions hearing, directions that have been made and in the detailed content of the stay decision, and in particular the schedule to that stay decision.  The Applicant has been encouraged to focus clearly and specifically on the nature of the criticisms that have been made by ASIC and has been invited on numerous occasions to focus on firstly those criticisms, and secondly, to put them in the context of whatever might be in Mr Douglas’s overall // the assessment of Mr Douglas’s overall competence and experience might be.

20. Against that background it is in my view completely unacceptable to be now in a situation where approximately two weeks before the matter is listed for hearing and against the background of the directions that were made on 13 September 2022 for the Applicant to have provided no explanation for his non-compliance with the directions of 13 September 2022.

21. The only response that has been made against the background of that non-compliance and my communication of 25 October 2022 is an oral request made by Ms Ardelean in the course of this directions hearing, a request unsupported by any explanatory material, for the matter to be - for there to be an extension of time for the Applicant to comply with the directions of 13 September 2022, and that time to be extended to the day before the scheduled hearing of the substantive review application.

22. That extension of time would be to 7 November 2022 and unless there was to be an adjournment of the hearing the hearing would then proceed upon 8 November 2022.  That is a patently unsatisfactory response having regard to the fact that the directions made on 13 September 2022, directions as I understand it made with the consent of the parties, contemplated that the Respondent would have a full three weeks to provide and to consider the Applicant’s submissions and additional supporting material.  And then approximately another two to three weeks between the provision of that material and the conduct of the substantive review hearing.

23. Against that background and against a particular awareness of the contents of section 2A of the Administrative Appeals Tribunal Act I turn now to consider the discontinuance and dismissal power provided for in section 42A of the Administrative Appeals Tribunal Act. Sub-section 5 authorises the Tribunal to dismiss an application without proceeding to review the decision where an Applicant for review fails, within a reasonable time, either to proceed with the application or to comply with the directions by the Tribunal in relation to the application.

24. Mr Paciocco’s statement of 28 October 2022 in its recitation of the facts of the history of the proceedings, together with the additional comments that I have made earlier, particularly in relation to paragraphs 11 to 13, demonstrates (in my view beyond any reasonable argument) that Mr Douglas has not complied with the Tribunal’s direction of 13 September and that he has failed to do so within a reasonable time.

25. The non-compliance is complete and subsisting and, having regard to the consensual nature of the directions made on 13 September, it is in my view again beyond argument that the failure is a failure to  // there was a reasonable time in those directions and that the non-compliance in accordance with the agreed timetable is a failure of a kind addressed in subsection 5 paragraph (b).

26. It is unnecessary to consider, therefore, whether or not, although it may be arguable, that the Applicant has in any event also failed to proceed with the application. 

27. The question that entertains my mind, and that I raised with the parties, concerns the proper construction of subsection 9 of the dismissal power provided for in section 42A. Subsection 9 appears as the fourth paragraph under a subheading, within the content of section 42A, that is headed “Reinstatement of application”.

28. Subsection 8 deals with the dismissal of proceedings in response to an indication from an Applicant of withdrawal of a review application, and it clearly authorises the reinstatement of an application that has been withdrawn.  Subsection 8A then deals with dismissal of an application where a party fails to appear.  Both subsection 8 and subsection 8A contemplate that an application for reinstatement may be made within the period specified in the further paragraph 8B.

29. Then subsection 9 without referring to the preceding subsections appears to give an unfettered power to the Tribunal to reinstate the application and give such directions as appear to be appropriate in the circumstances.  That subsection is not specifically referred back to a dismissal of the kind addressed in subparagraph 8 to 8B.  Two views are open, one view is that it is a complete power to reinstate any application that has been dismissed.  On another view, which ASIC considers is supported contextually by the sequence in which subsection 9 appears, is that the power to reinstate the application is only a power to reinstate an application that has been dismissed in accordance with subsection 8 and subsection 8A.

30. The question of construction raised by subsection 9 is a nuanced one, perhaps not without difficulty.  I raised with the Applicant the question of construction and I think it is fair to say that the Applicant is to be taken to support the view that subsection 9 confers an unfettered power to reinstate.

31. Ms Bentley on behalf of ASIC took a contrary view and contended that the proper construction of subsection 9 is to read it as subservient.  Ms Bentley’s submission was that subsection 9 should be regarded as subservient to the provisions of subsection 8 and section 8A, and thus limited to reinstatement of applications dismissed in that fashion.

32. The view I take is that generally speaking a statutory power should be read to its fullest extent and not subject to contextual limitations not explicitly expressed - unless there is a very good reason to do so.  It seems to me that in the construction of subsection 9 the power is fully stated and there is no reason, no compelling reason in any event, to regard the reinstatement power or the power to reinstate the application as limited to an application that has been dismissed only on the grounds referred to in paragraph 8 and 8A.

33. It seems to me that it would be odd indeed if the Tribunal had a power to reinstate an application of the kind referred to in subsection 8, that is an application that had been unilaterally withdrawn by the Applicant without explanation and also to have a power to reinstate for failure to appear but have no power to reinstate an application where an Applicant had the application dismissed only for the reason in subsection 5.

34. For those reasons I prefer to take the view that the proper construction of subsection 9 is to confer on the Tribunal the power to reinstate an application that has been duly made where that application was dismissed, on the basis that I propose to dismiss the present application, that is for a failure to comply with the direction by the Tribunal in relation to the application.

35. The practical benefit of taking that construction of subsection 9 is that it permits the Tribunal to achieve its objective in subsection 2A of bringing to an end a review process that has been characterised by delay and inadequate participation by the Applicant for review.  At the same time, that construction achieves the practical benefit that if and when an Applicant, such as Mr Douglas, is ever able to put himself in a position where he could demonstrate the existence of a review application supported by appropriate and sufficient evidence to justify a real consideration of the merits of the application, then existence of the general discretion conferred by subsection 9 to reinstate the application and “Give such directions as appear to it to be appropriate in the circumstances”, appears to me to achieve the result that (i) would be consistent with the Tribunal’s objectives in subsection 2A - insofar as it would provide an accessible means of review, (ii) was fair and economical to the parties in the sense that the application would be reviewed only in circumstances where the Applicant was in a demonstrably effective position to pursue the application, (iii) would be reasonably proportionate to the importance of the matter, the importance being both Mr Douglas’s own personal interest and also the public interest in securing the competence and integrity and availability of superannuation auditors and, (iv) would also achieve the objective of promoting public trust and confidence in decision making of the Tribunal - because it would leave open to the Tribunal the opportunity of addressing the real merits of a contentious decision.

36. If I am wrong in my view about the construction of subsection 9, and I proceed to dismiss the application on that basis, it would be open for the Applicant in due course to rely upon subsection 10 of section 42A, which I think on any view indicates that it is open to the Tribunal to reinstate an application that has been dismissed in “error”.

37. There would be a potential argument, and I take this into account in influencing the dismissal decision that I propose to make.  It would be open to the Applicant in due course, if he is in a position to seek a reinstatement of the application, it would be open to him to contend that in my dismissal under subsection 9, if I proceeded on an erroneous basis in so doing, I achieved a dismissal that was made in error.  And again, that would potentially enliven an application to reinstate the application, which again would be subject to the Tribunal’s power or discretionary power, to “give such direction to it to be appropriate in the circumstances”.

38. For all of those reasons, in my view the appropriate course is to dismiss the application, on the grounds that I have indicated.  That is, the Applicant’s failure to comply with the directions of 13 September 2022, having regard to the uncontested material set out in Mr Paciocco’s statement.  That failure is a failure that has endured for considerably longer than any reasonable time. 

39. Accordingly, I dismiss the application.

I certify that the preceding 39 (thirty-nine) paragraphs are a true copy of the reasons for the decision herein of Mr P W Taylor SC, Senior Member

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Associate

Dated: 21 November 2022

Date(s) of hearing:	28 October 2022
Solicitors for the Applicant:	Ms Ardelean
Counsel for the Respondent:	Ms Bentley