Ellis and Australian Securities and Investments Commission

[2019] AATA 2346

Ellis and Australian Securities and Investments Commission [2019] AATA 2346 (2 August 2019)

Administrative Appeals Tribunal

ADMINISTRATIVE APPEALS TRIBUNAL              )

)  No: 2018/3524

Taxation and Commercial Division            )

Re: Shane Ellis
Applicant

And: Australian Securities & Investments Commission
Respondent

CORRIGENDUM

TRIBUNAL:	Member D K Grigg
DATE OF CORRIGENDUM:	12 August 2019
PLACE:	Brisbane

The Tribunal directs the Registrar, pursuant to subsection 43AA(1) of the Administrative Appeals Tribunal Act 1975 (Cth), to alter:

1.    the text of paragraph 25 of the decision to read as follows:

“Pursuant to section 117 of the Act, “a person” must lodge an application with ASIC to register a company. “Person” is not defined in the Act. “Person" is however defined in section 22(1)(a) of the Acts Interpretation Act 1901 (Cth) (“AIA”) which applies to Commonwealth legislation. The AIA provides that expressions used to denote persons generally include a body politic or corporate as well as an individual.”

2.    the text of footnote 14 of the decision to read as follows:

“Section 5C(2) of the Act provides that the version of the AIA that applies to the Act is the version that was in force as at 1 January 2005.”

…………[SGD]……..
Member D K Grigg

Division:TAXATION AND COMMERCIAL DIVISION

File Number:          2018/3524

Re:Shane Stuart Ellis

APPLICANT

AndAustralian Securities & Investment Commission

RESPONDENT

Decision

Tribunal:Member D K Grigg

Date:2 August 2019

Place:Brisbane

The Tribunal affirms the decision under review.

.................................[SGD].....................................

Member D K Grigg

Catchwords

COMPANY NAMES – whether Ministerial consent should be given to use the word “trustee” in a company name – application of the Guidelines for Ministerial Consent to Body Corporate Names under the Corporations Act 2001 – whether the “applicant” under the Guidelines for Ministerial consent is the yet to be incorporated company or the proposed director – decision under review affirmed.

Legislation

Acts Interpretation Act 1901 (Cth)

Administrative Appeals Tribunal Act 1975 (Cth)

Corporations Act 2001 (Cth)

Corporations Regulations 2001 (Cth)

Trusts Act 1973 (Qld)

SECONDARY MATERIALS

Guidelines for Ministerial Consent to Body Corporate Names under the Corporations Act 2001

REASONS FOR DECISION

Member D K Grigg

2 August 2019

introduction

1. On 2 February 2018, Mr Shane Ellis lodged an application with the Australian Securities & Investments Commission (“ASIC”) requesting the Minister’s consent to use the word “trustee” in a proposed company name. The proposed company name is “The Private Trustee Company of Australia Pty Ltd” (“Proposed Company Name”).[1]

   [1]     Exhibit 1, T Documents, T3, page 11, Letter from Mr Ellis to ASIC dated 31 January 2018.

2. On 18 June 2018, ASIC decided to refuse Mr Ellis’s application to register the Proposed Company Name.[2]

   [2]     Exhibit 1, T Documents, T2, pages 7-10, Statement of Reasons for decision dated 18 June 2018.

3. On 22 June 2018, Mr Ellis applied to this Tribunal for review of the ASIC decision pursuant to section 1317B of the Corporations Act 2001 (Cth) (“the Act”).[3] The Tribunal has jurisdiction to review this decision pursuant to section 25 of the Administrative Appeals Tribunal Act 1975 (Cth) (“AAT Act”).

   [3]     Exhibit 1, T Documents, T1, pages 1-6, Application for Review dated 22 June 2018.

   ISSUE FOR THE TRIBUNAL

4. The issue for determination by the Tribunal is whether consent ought to be given to Mr Ellis to register and use the Proposed Company Name.

5. The parties agreed to have the matter determined on the papers without the need for a hearing pursuant to section 34J of the AAT Act.

   BACKGROUND

6. Pursuant to section 148 of the Act, companies may use either “an available name”, or simply the expression “Australian Company Number” followed by the company’s ACN, as their company name.

7. Company names can be applied for either at the time of incorporation or changed later by lodging the appropriate forms with ASIC.

8. Mr Ellis, as the proposed director of a yet to be incorporated company applied, pursuant to section 117 of the Act, to register the company with the Proposed Company Name.

9. Because the Proposed Company Name includes the word “trustee”, Ministerial consent is required before that name can be used. This is because the word “trustee” is not an available name.

10. Section 147 provides for when a name will be available. Pursuant to section 147(1) of the Act, a name is available to a company unless, relevantly, it is unacceptable for registration under the regulations. Where a name is unacceptable for registration under the regulations, the Minister may still consent to that name being available pursuant to section 147(2) of the Act. Such consent may also be subject to conditions. The Minister may delegate this function or power in accordance with section 147(2) and the delegate is subject to the Minister's directions.

11. Relevantly in this case the Corporations Regulations 2001 (Cth) provide that the word “trust” and “trustee” are restricted words and unacceptable for registration.[4] Therefore, the Minister’s consent is required before the proposed company can operate under the Proposed Company Name.

    [4] Regulation 2B.6.01 and Rule 6203(b)(i) of Part 1 of Schedule 6, Corporations Regulations 2001 (Cth).

12. In 2008, Guidelines for Ministerial Consent to Body Corporate Names under the Corporations Act 2001 (“Guidelines”) were issued by the Minister for the purposes of section 1345A(2) of the Act. The Guidelines set out the Criteria to be applied and the procedures to be followed when considering applications for the Minister’s consent to a name not otherwise available.

13. The delegate of the Minister must have regard to the Guidelines. The Tribunal, standing in the shoes of the Minister, must also have regard to the Guidelines.

14. The Guidelines provide for when consent will normally be granted to use the word “trust” or “trustee” as follows (“Criteria”):[5]

    [5] Guidelines for Ministerial Consent to Body Corporate Names under the Corporations Act 2001, pages 22-23.

    “Criteria for the Assessment of Applications

    Consent will normally be granted to the use of the word ‘Trust’ or ‘Trustee’, or words having a similar meaning, where:

    (a) the applicant is authorised by State or Territory trustee legislation to act as an executor or administrator of estates; or

    (b) the applicant is authorised by special purpose legislation to perform trustee functions (e.g. the Uniting Church in Australia (Australian Capital Territory) Property Trust, a body corporate established under the Uniting Church in Australia Ordinance 1977); or

    (c) the applicant is an administrator of a public or charitable trust i.e. a trust for the advancement of education, religion, the relief of poverty or other purposes beneficial to the community; or

    (d) the applicant is a trustee of a trust. This will need to be demonstrated by reference to trust deeds and other documentation; or

    (e) the applicant is a foreign company and its name is so well known in its place of origin (whether generally or within a particular industry) that it would be inequitable to refuse it registration.

    This policy is based on the need to avoid any possibility of members of the public being misled about the nature of an applicant body.”

    (emphasis added)

15. Mr Ellis contends that he satisfies paragraphs (a), (c), and (d) of the Criteria and that therefore consent should be granted for him to use the Proposed Company Name.

16. Mr Ellis is a legal practitioner, registered to practice in Queensland and by the High Court of Australia[6] and practices primarily in wills, estate and superannuation law.

    [6]     Exhibit 1, T Documents, T4, page 16, Mr Ellis’ practicing certificate for the financial year ended 30 June 2018.

17. Mr Ellis says he is authorised by the Trusts Act 1973 (Qld) to act as an executor and trustee of estates and has been appointed as executor and trustee under many wills.[7]

    [7]     Exhibit 1, T Documents, T4, pages 20-104, Examples of wills appointing Mr Ellis as director of trustee companies and as trustee.

18. Mr Ellis states that, if consent to use the name is granted, the company, once registered “will be utilised exclusively to conduct the Wills and Trusts section of the Applicant's legal practice as an Incorporated Legal Practice ("ILP").  The consent to the use of the name could make such undertaking a condition of registration if the Tribunal chooses to do so. [Conditional consent may be given subject to conditions pursuant to S147(3) Corporations Act, 2001.]”.[8]

    [8]     Exhibit 2, Applicant’s Statement of Issues, Facts and Contentions, page 3, paragraph 4.13.

19. Mr Ellis contends that:

    (a)he meets criteria (a) because the Trusts Act 1973 (Qld) “specifically states that a "trustee includes not just a "trustee corporation" but "also any other corporation in which a trust is vested" or a "personal representative” and therefore Mr Ellis and the company do not have an Australian Financial Services Licence (“AFSL”);[9]

    (b)“Neither a licenced lawyer, nor an ILP, need to hold an AFSL licence to act as an Executor, Administrator or Trustee”;[10]

    (c)he meets criteria (c) because he has been appointed to be the administrator of several Private Ancillary Funds (“PAF”) to be constituted under the Federal Laws, one of which is a private charity; and

    (d)Criteria (d) has also been met as he has been appointed to be the Trustee of various Trusts under State and Federal Laws.[11]

    [9]     Exhibit 2, Applicant’s Statement of Issues, Facts and Contentions, page 3, paragraph 4.13.

    [10]    Exhibit 2, Applicant’s Statement of Issues, Facts and Contentions, page 6, paragraphs 4.19 and 4.20.

    [11]    See Exhibit 1, T Documents, T4, pages 85-86, Discretionary Trust Deed; page 87, Super Fund Trustee Director; and Trust Directorship pages 88-89.

20. Mr Ellis submitted numerous references which confirm his expertise as a noted Australian legal expert in the field of trusts including as the personal representative under Wills, Enduring Powers of Attorney and other trusts at law including Self-Managed Superannuation Funds (“SMSFs”).[12]

    [12]    Exhibit 1, T Documents, T4, pages 105-138, Annexure “M”.

21. Mr Ellis explained that if consent is granted he will register the company as an incorporated legal practice and it:[13]

    “…will exclusively conduct the estates and trusts arms of the Applicant's legal practice and the Applicant be the Legal Practitioner Director of the company. So that no member of the public can be misled by the use of the proposed name, the company will not act in any legal matter that is not related to executorship, trusteeship, trusts, or the administration of estates. Accordingly the use of the name, "THE PRIVATE TRUSTEE COMPANY OF AUSTRALIA PTY LTD" cannot thereby mislead the public by using the word "trust" in its' name because that is all the ILP company will do – act as a trustee corporation and work with trusts.

    …conditional approval could be that the company can only act as a legal practice corporation practicing solely in estates and trusts. The company can only act in matters where it is undertaking executorship, trusteeship, trusts work, or administration of estates. (NB: the Queensland Law Society requires a legal practice Director to have legal qualifications and be admitted as a practicing lawyer at all times when so acting as Director).”

    [13]    Exhibit 2, Applicant’s Statement of Issues, Facts and Contentions, page 4, paragraphs 4.13.

    Who is the applicant for the purposes of the Guidelines?

22. The Guidelines require the decision-maker to assess whether “the applicant” has relevant statutory authorisations or experience relevant to the words “trust” and “trustee”. The Guidelines explain that each application is to be considered on its merits, having regard to the individual circumstances involved.

23. A primary issue for determination in this matter is who the “applicant” is for the purposes of making that assessment. This is relevant because the company desirous of using the Proposed Company Name has not yet come into existence. Mr Ellis contends that in considering whether he, “the applicant”, is relevantly authorised or has the requisite experience, one need only look to his personal experience as he is the person applying to incorporate the company under the Proposed Company Name. Conversely, ASIC contends that the only experience relevant is that of the corporation itself and that therefore it cannot be said that the proposed company meets the criteria for when consent will normally be granted.

24. Pursuant to section 119 of the Act, a company does not come into existence as a body corporate until the day on which it is registered.

25. Pursuant to section 117 of the Act, “a person” must lodge an application with ASIC to register a company. “Person” is not defined in the Act. “Person" is however defined in section 2C of the Acts Interpretation Act 1901 (Cth) (“AIA”) which applies to Commonwealth legislation.[14] The AIA provides that expressions used to denote persons generally include a body politic or corporate as well as an individual.

    [14] Section 2(1), AIA.

26. A person may lodge an application in the prescribed form with ASIC to reserve a name for a company. If the name is available, ASIC must reserve it pursuant to section 152(1) of the Act.

27. It is not in dispute that, for the purpose of the Act, therefore an individual such as Mr Ellis may apply for a company name in an application to incorporate a company.

28. However, the reference in the Guidelines is to an “applicant”, not a “person”. “Applicant” is not defined in the Guidelines.

29. Mr Ellis contends that given that an individual may apply for a company name, the reference in the Guidelines must also refer to an individual making the application.

30. While that contention may seem reasonable at first blush, it does not take into account the primary policy consideration of the Guidelines. The overall policy consideration is set out in the background to the Guidelines as follows:

    “The overall policy consideration in considering applications under subsection 147(2) or 601DC(2) to the use of body corporate names is whether the proposed name would be likely to mislead persons dealing with the body about the nature of the body’s activities.”

    (emphasis added)

31. Guidance as to who is intended as the applicant can also be gleaned from the Criteria itself. As set out above the policy seeks to avoid people being misled about the nature of an “applicant body”. The key word here is “body”. “Body” is defined in section 9 of the Act to mean a body corporate or an “unincorporated body” and includes, for example, a society or association. “Body corporate” is also defined to include an “unincorporated registerable body”. What those definitions do not include is an individual.

32. How can an assessment be made regarding whether a proposed name would mislead persons, when the proposed user of the name, a yet to be incorporated body corporate, does not itself meet the criteria? The Tribunal agrees with ASIC’s contention that the reference to applicant can only sensibly be read as a reference to the proposed company which intends to use the name.

33. There is no dispute that the proposed company does not at this stage, as opposed to some future time, meet the criteria in the Guidelines. It may be that an incorporated legal practice operated by Mr Ellis may, at some future date, meet the necessary criteria. At this stage, it does not.

34. Whether Mr Ellis is personally authorised by statute to act an executor of an estate or has been a trustee of a trust cannot be attributed to an unincorporated body.

35. The application for the Proposed Company Name currently is premature.

    DECISION

36. The decision under review is affirmed.

I certify that the preceding 36 (thirty-six) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg

...................................[SGD]..................................

Associate

Dated: 2 August 2019

Date of hearing:	On the papers
Date reserved:	18 June 2019
Applicant:	Mr Shane Stuart Ellis
Solicitors for the Respondent:	Australian Securities & Investments Commission