Ehrenfeld and Australian Securities and Investments Commission
[2021] AATA 1406
•19 May 2021
Ehrenfeld and Australian Securities and Investments Commission [2021] AATA 1406 (19 May 2021)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2016/3122
Re:Gabriel Ehrenfeld
APPLICANT
AndAustralian Securities and Investments Commission
RESPONDENT
DECISION
Tribunal:Deputy President Rayment OAM QC
Date:19 May 2021
Place:Sydney
Pursuant to section 42A(5) of the Administrative Appeals Tribunal Act 1975, the Tribunal dismisses the application.
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Deputy President Rayment OAM QC
CATCHWORDS
PRACTICE AND PROCEDURE – application for dismissal under s 42A(5) of the Administrative Appeals Tribunal Act 1975 – repeated non-compliance with Tribunal’s directions – re-litigation of matters already decided in the Supreme Court of NSW – whether the Tribunal is bound by s 91 Evidence Act 1995 (Cth) – propensity for needless delay and prolongation of final determination - application dismissed
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth)
Evidence Act 1995 (Cth)
CASES
Ehrenfeld and Australian Securities and Investments Commission [2019] AATA 6892
Ehrenfeld v Zeng [2016] NSWCA 6
Frugtniet v Migration Agents Registration Authority [2017] FCA 537
Murdaca v Australian Securities and Investment Commission [2009] FCAFC 92Zeng v Mossensons [2014] NSWSC 1179
REASONS FOR DECISION
Deputy President Rayment OAM QC
19 May 2021
In 2016 the respondent made an order against the applicant banning him from managing corporations for five years. The applicant sought review in the Tribunal. The banning order is about to expire, which is not to say that the proceedings are moot, because the applicant wishes to expunge the banning order from the public records.
For the second time, the respondent has moved to dismiss the proceedings under s 42A(5) of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act). Section 42A(5) provides that:
If an applicant for a review of a decision fails within a reasonable time:
(a) to proceed with the application; or
(b) to comply with a direction by the Tribunal in relation to the application;
the Tribunal may dismiss the application without proceeding to review the decision.
On the first occasion, I dismissed the application and instead made a series of directions designed to enable the proceedings to be set down for hearing at an early date. My reasons for judgment are set out at [2019] AATA 6892. Following the publication of those reasons, the applicant applied to the respondent for variation of the times specified in my reasons, and the respondent agreed to the requests made by the applicant. By consent, times for compliance were fixed as follows:
1. By 31 October 2019, the Applicant is to file and serve a detailed and itemised statutory declaration of his own answering the allegations made by the Respondent in its statement of facts issues and contentions dated 15 December 2017 and stating all of the evidence he wishes to give about each such matter. If the Applicant denies or does not admit any allegation in the Respondent’s statement of facts issues and contentions, he is to identify the allegation by paragraph number in the Respondent’s statement of facts issues and contentions and set out any contradicting fact relied upon to support his denial or non-admission.
2. By 29 November 2019, the Applicant is to set out in detail his own evidence supporting the case that he ought not to be disqualified, or ought to be disqualified for some period less than 5 years, identifying the paragraph or paragraphs (if any) in his own statement of facts issues and contentions to which each such matter is said to relate.
3. By 17 December 2019, the Applicant is to file and serve in the form of a statutory declaration the evidence of any person who he intends to call, who has agreed to give evidence on his behalf, setting out all the evidence he wishes to obtain from each such person.
4. By 27 August 2019, if the Applicant has decided not to give evidence himself in these proceedings, he should so inform the Tribunal, in which case direction 2 above will be vacated.
5. By 20 December 2019, if the Applicant desires to seek leave to issue any summons to give evidence or produce documents, he should make an application to do so supported by his own statutory declaration stating, in the case of summonses to give evidence, his reason for seeking such leave and the issue or issues to which the evidence will go, all the evidence he expects to be able to lead from the witness, and the basis of his expectation.
6. By 24 January 2020, in the case of a summons to produce documents, the Applicant should support an application for leave with his own statutory declaration indicating why he seeks the documents in question, identifying the documents with particularity, and indicating which paragraphs in the statement of facts issues and contentions of either party the documents are expected to relate to.
It is common ground that, except for the first of those directions, the applicant filed the relevant documents late. And therefore, outside the directions. That fact alone is sufficient to enliven the discretion in s 42A(5) to dismiss the proceedings. Mr Ehrenfeld conducted an analysis of the directions designed to show that some of the times involved did not bind him. For example, he ventured the suggestion that he had not decided whether or not to give evidence in the case by 27 August 2019, so that direction 2 did not have to be complied with. He added, in relation to direction 2, that nothing prevented him from putting on evidence after 29 November 2019, if he decided, later, that he did want to give evidence in the case. If, despite the passage of some four years, Mr Ehrenfeld did not know whether he was going to give evidence, that would be surprising to say the least. Moreover, his consent to the time limits is inconsistent with his explanation, in that the dates were fixed by consent in August 2019.
The applicant in written submissions has sought to take advantage of the terms of direction 5 made on 4 August 2020. That direction was made in response to his emailed application dated 2 August 2020, which asked, inter alia, that he have leave to have filed documents filed subsequent to 17 February 2020. Direction 5 was not intended to prejudice the respondent’s application for dismissal which was then pending, and, as I read it did not do so. To avoid doubt I will rescind direction 5 and substitute a direction in the terms sought by the applicant on 2 August, 2020 as follows: 5. The applicant has leave nunc pro tunc to have filed his Amended Statement of Facts Issues and Contentions dated 16 February 2020 and to have filed any documents after 17 February 2020.
The respondent also moves for dismissal on the ground that the applicant has failed within a reasonable time to proceed with the application. I have not found it necessary to consider that matter.
For a number of reasons I have decided to make an order for dismissal of the application.
In the first place, one of the principal matters disputed between the parties relates to the use to be made of the decision of the New South Wales Supreme Court of the decision of McDougall J in Zeng v Mossensons [2014] NSWSC 1179, in which Mr Ehrenfeld was a defendant. Mr Ehrenfeld was ordered to pay $523,677.33 to Zeng and Shandong Mining China, plus interest, and certain other orders were made against him. At the time of judgment, Mr Ehrenfeld was self-represented.
Mr Ehrenfeld appealed to the Court of Appeal of NSW: Ehrenfeld v Zeng [2016] NSWCA 6. Mr Ehrenfeld conducted that appeal without representation. The appeal before Macfarlan and Gleeson JJA and Emmett AJA was dismissed with costs. As appears from the judgment of Emmett AJA, with whom Macfarlan and Gleeson JJA agreed, a principal issue on the appeal related to the question whether Mr Ehrenfeld was a party bound by a deed dated 9 June 2010 (the ‘Warranty Deed’) although he had signed it only on behalf of one of his companies, Tilapia, both on its own behalf and as a trustee under a certain trust. In the Warranty Deed, Tilapia in both capacities was described as ‘collectively “Ehrenfeld”’. A final deed was executed in September 2010, (the ‘Final Deed’) and the parties referred to collectively in the Warranty Deed as “Ehrenfeld” were also joined to the Final Deed. Those parties were put under obligations by the Final Deed which ultimately led to the order for payment made against the present applicant. Mr Ehrenfeld submitted both at first instance and on appeal that he was not a party bound by the Warranty Deed or by the Final Deed.
Justice McDougall held that the deed manifested a clear intention, read objectively and as a whole that Mr Ehrenfeld was intended to be a party to it. His Honour concluded that his signature ‘(even though not in terms on his own account)’ must be taken as an acknowledgement by him that he was indeed a party.
Emmett AJA described Mr Ehrenfeld’s contention that he was not a party to the Final Deed as ‘completely without substance’.
The question whether Mr Ehrenfeld was a party bound having been resolved against him, it was held on the facts that the withdrawals which he authorised were contrary to the arrangements made with Mr Zeng and others, so that he was made liable to account. The Court of Appeal rejected a challenge to those findings by Mr Ehrenfeld.
Whether the pre-requisites to the authority of Mr Ehrenfeld to cause the monies to be withdrawn was also in issue both at first instance and on appeal, and the applicant was unsuccessful on both points.
These matters are relevant to the present matter, because Mr Ehrenfeld’s filed documents make it clear that he desires to re-litigate the matters already decided in the Supreme Court in these proceedings.
For example, he suggests that he was not a party to the Final Deed and that references to the Supreme Court judgment of McDougall J are inappropriate because of s 91 of the Evidence Act 1995 (Cth). That section provides as follows:
91 Exclusion of evidence of judgments and convictions
(1) Evidence of the decision, or of a finding of fact, in an Australian or overseas proceeding is not admissible to prove the existence of a fact that was in issue in that proceeding.
(2) Evidence that, under this Part, is not admissible to prove the existence of a fact may not be used to prove that fact even if it is relevant for another purpose.
Section 91 does not in terms apply to the AAT, and the Tribunal is not required to apply the rules of evidence: see Frugtniet v Migration Agents Registration Authority [2017] FCA 537 (Kenny J) at [212]-[214]. Her Honour there said:
Mr Frugtniet’s submission must be rejected, primarily because the Evidence Act does not apply to proceedings in the Tribunal. Section 4(1) of the Evidence Act provides that the Evidence Act applies to all proceedings in a federal court. The Dictionary to the Evidence Act provides that “federal court” means
(a) the High Court; or
(b) any other court created by the Parliament (other than the Supreme Court of a Territory);
and includes a person or body (other than a court or magistrate of a State or Territory) that, in performing a function or exercising a power under a law of the Commonwealth, is required to apply the laws of evidence.
The Tribunal does not fall within this definition since it is not required to apply the laws of evidence. Section 33(1)(c) of the AAT Act expressly provides that “the Tribunal is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks appropriate”. Section 91 of the Evidence Act does not therefore apply to the Tribunal: see also Danagher v Child Support Registrar [2014] FCA 1408; 228 FCR 213 at [37]-[38] (Gilmour J); Ralph v Repatriation Commission [2015] FCA 165; 145 ALD 357 at [64] (Murphy J); and Sullivan v Civil Aviation Safety Authority [2014] FCAFC 93; 226 FCR 555 at [91] (Flick and Perry JJ).
As the MARA submitted, the Tribunal may use the findings of another tribunal or of a court as the basis for its own findings, according such findings the weight that it considers appropriate in all the circumstances of the case: see, e.g., the reasons for decision of the Tribunal in Re Thorpe and Commissioner of Taxation [2011] AATA 638; 123 ALD 355 at [72].
Moreover the findings which Mr Ehrenfeld seeks to re-litigate are mostly not questions of fact, but rather questions of law.
It would be wasteful of the parties’ time, and of the Tribunal’s time, for such issues to be litigated again. There are, I believe, some issues of fact about Mr Zeng having expressly authorised Mr Ehrenfeld to withdraw the monies in question, upon which Mr Ehrenfeld bore the onus of proof before the Supreme Court and on which he did not lead evidence, so on which he did not succeed. Whether that case may be made again before the Tribunal is an issue which has not yet been debated between the parties.
In the second place, Mr Ehrenfeld wishes to assert in these proceedings that the Australian Securities and Investments Commission (ASIC) has acted in bad faith in a number of ways. For example, he wishes to suggest that the delegate did not believe to be true a number of findings which she made. For that purpose he wishes to summon her to give evidence, and call her without having interviewed her. Similarly, he wishes to obtain a finding that she was instructed how to conduct the hearing at which he gave evidence.
The task before the Tribunal, speaking generally, is to review decisions, not reasons, and to act on the evidence before the Tribunal itself. The allegations which Mr Ehrenfeld makes about ASIC’s hearing as decision-maker are not only misconceived, they are likely to be productive of significant delay in the case.
On a similar point, Mr Ehrenfeld asserted that ASIC has been guilty of a breach of the Model Litigant guidelines or its common law equivalent and for that reasons its application for dismissal should be refused on discretionary grounds. I directed him to particularise the alleged breaches in writing within seven days. Several months later he filed a document dealing almost entirely with the principles which he said applied, and with alleged breaches only generally and vaguely.
Similarly, when he answered a number of paragraphs in the Statement of Facts Issues and Contentions of ASIC under direction 1, he complained about the failure of ASIC to agree to a number of applications he made to the Tribunal or to ASIC itself, such as his allegation that ASIC is to blame for his failure to seek a stay of the banning order by not consenting to a stay, and his complaint about ASIC opposing the issue of summonses which he desired to cause to be issued by the Tribunal.
He also attacked allegations about the correctness of reports under s 533(1) of the Corporations Act 2001 (Cth), despite the Tribunal having drawn attention to the holding of the Full Court of the Federal Court in Murdaca v ASIC [2009] FCAFC 92.
In the third place, the applicant has evinced an intention to act in disregard of or avoid directions of the Tribunal. Senior Member Toohey made orders under s 25(4A) of the AAT Act, deleting from the applicant’s first Statement of Facts Issues and Contentions a number of issues, including issues alleging that the original decision of ASIC was made in bad faith. I drew attention to this matter in my reasons of 13 August 2019, and indicated that I treated the orders as still in force. Despite those directions, the applicant filed a further Statement of Facts Issues and Contentions in disregard of the orders originally made by SM Toohey and my confirmation of them. On the argument of the present application Mr Ehrenfeld argued an application to amend my reasons of 13 August 2019 in the relevant respect and I dismissed it. Making that application did not relieve Mr Ehrenfeld from complying with the direction before his application was dealt with.
Each of the matters to which I have referred has the propensity needlessly to prolong the final determination of the proceedings, and to multiply the number of interlocutory hearings which will be required before a hearing date can be fixed.
In all the circumstances the correct or preferable decision in my opinion is to make an order dismissing the proceedings, and I so order.
I certify that the preceding 25 (twenty-five) paragraphs are a true copy of the reasons for the decision herein of Deputy President Rayment OAM QC
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Associate
Dated: 19 May 2021
Date(s) of hearing: 27 November 2020 Date final submissions received: 12 March 2021 Counsel for the Respondent: Mr D Healey & Ms D Forrester Solicitors for the Respondent: Ms G Wong
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