Frugtniet v Australian Securities and Investment Commission

[2019] HCATrans 7

[2019] HCATrans 007

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M136 of 2018

B e t w e e n -

RUDY FRUGTNIET

Appellant

and

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Respondent

KIEFEL CJ
BELL J
GAGELER J
KEANE J
NETTLE J
GORDON J
EDELMAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 7 FEBRUARY 2019, AT 9.45 AM

Copyright in the High Court of Australia

MR M.H. O’BRYAN, QC:   If the Court pleases, I appear with my learned friend, MR J.P. WHEELAHAN, for the appellant.  (instructed by SBA Law)

MR S.B. LLOYD, SC:   If it please the Court, I appear for ASIC with MR R.C. KNOWLES.  (instructed by Australian Securities and Investments Commission)

KIEFEL CJ:   Are counsel still agreed on the two‑hour estimate that the Court was given?

MR LLOYD:   Yes, or less.

MR O’BRYAN:   Yes, your Honour.

KIEFEL CJ:   We shall not have a morning break then.  Thank you.  Yes, Mr O’Bryan.

MR O’BRYAN:   If the Court pleases, the appeal raises a relatively short question of statutory construction.  May I commence with the decision of the Full Federal Court below.  The decision of the Full Federal Court can be found in the core appeal book at page 126.  At page 130, at paragraphs 1 to 3, there is a very short summary of the procedural history, through ASIC’s decision to the Administrative Appeals Tribunal and on to the Full Federal Court.  At paragraphs 7 and 9 on page 131, the Court will see the two spent convictions that were taken into account by the Tribunal in its decision.  The first is referred to as the 1978 UK convictions and the second in paragraph 9 is referred to as the 1997 findings of guilt.

The consideration of the grounds of appeal that concerned the spent convictions commences at paragraph 71 – that is at page 147 – and as noted at paragraph 72 on that page, appeal ground 2 before the Full Court concerned the 1978 UK convictions.  Appeal ground 4 concerned the 1997 finding of guilt but both appeal grounds raised the same question, which we are dealing with today.

The question before the Full Court which arises was framed by the Full Court at paragraph 89, and that is on page 151.  Although perhaps phrased just slightly awkwardly, for reasons I will explain, the Full Court states at paragraph 89:

As to Pt VIIC of the Crimes Act, the relevant question, as the primary judge correctly identified, is whether s 85ZZH(c) of the Crimes Act operated to preclude the Tribunal from taking into account the 1978 UK convictions (or the 1997 finding of guilt).

Perhaps the question might be better phrased in the positive, whether section 85ZZH(c) of the Crimes Act operated to permit the Tribunal to take into account the spent convictions. It is uncontroversial that ASIC was precluded by Division 3 of Part VIIC of the Crimes Act from taking those spent convictions into account in making its decision under the National Consumer Credit Protection Act.

In reaching its decision in confirming that the Tribunal was permitted to take into account the spent convictions, the Full Court reached two primary conclusions in support of that view.  The first is stated at paragraph 99, which is on page 154.  If I could refer simply to the second sentence of paragraph 99 which is that:

The ordinary and natural meaning of s 85ZZH extends to apply it to the tribunal engaged in merits review.

Framed in a narrow sense, just simply based on the literal text of the statute, the appellant does not contend otherwise.  The appellant is not seeking to argue that the word “decision” in its ordinary usage in just – in a literal textual sense, has a different meaning and does not object to the conclusion reached by the Full Court there at paragraph 99.

KIEFEL CJ: So you do not contend that section 85ZZH(c) might be read to limit the decision to one that is not merits review?

MR O’BRYAN:  Yes. I am sorry, your Honour, we do contend that. But the argument is not based on a contention that the ordinary meaning, or the dictionary meaning of “decision” in that section is something other than that. It is an argument based on the proposition that the generality and the breadth of section 85ZZH(c) should not be construed in a manner to have the effect of overriding another statute of the Commonwealth Parliament, and specifically section 43 of the Administrative Appeals Tribunal Act.

KIEFEL CJ:   This is your general and special approach, rather than an interpretive approach?

MR O’BRYAN:   Well, we would still contend it is interpretive.

KIEFEL CJ:   I mean of the text of paragraph (c).

MR O’BRYAN:   Yes, that is right.  All I wish to concede is we are not seeking to say the word “decision” in its ordinary meaning ‑ we are not seeking to say that a decision of the Tribunal under the AAT Act is not a decision within the ordinary use of that word.  When the Tribunal makes a decision or determination under the AAT Act, one might refer to that as a decision.  It is difficult to say that is not a decision.

KIEFEL CJ:   I do not think that is really what I was referring to.  The respondent, in its submissions, points up the possibility of a construction that the term “decision” in that provision could be effectively limited but you do not take up that offer of argument at all?

MR O’BRYAN: We take it up in this sense. We say, in opposition to ASIC, that section 85ZZH(c), if interpreted to apply to decisions of the Tribunal under the AAT Act in circumstances such as the present, creates conflict with the AAT Act, and creates conflict with the ordinary requirements of the Tribunal under that Act. And that is in opposition to ASIC, because ASIC say there is no conflict. And the point I am about to come to is that the Full Court agrees that there is no conflict. The Full Court, its second primary conclusion is that there is no conflict between section 85ZZH(c) and the AAT Act. We say that that is not right; that in fact if 85ZZH(c) is read in this way, and “decision” means a decision of the Tribunal under the AAT Act, there is conflict.

Perhaps if I could go to that point, just to make good how our argument is put because I did wish to summarise our argument on the basis of the second conclusion reached by the Full Court. The second conclusion of the Full Court can be found within paragraphs 110 to 118, which is on pages 158 and 159. I have paraphrased that conclusion in those terms that there is no conflict between section 85ZZHC of the Crimes Act and section 43 of the AAT Act. One can see from these paragraphs why the Full Court reached that conclusion. At paragraph 110, the Full Court refers, ultimately with approval to what Justice White said in Kocic on an analogous issue that arose under New South Wales legislation and where Justice White at paragraph 110 in Kocic, his Honour noted that:

by s 63(1) of the ADT Act –

of New South Wales:

the tribunal was required to make the correct and preferable decision having regard to the material before it.

And, his Honour Justice White relied upon Drake for that proposition. Section 63 of the ADT Act is the analogue of section 43 of the AAT Act in the Commonwealth sphere. The Full Court goes on to say at 110:

White JA considered that s 16 –

That is of the Criminal Records Act of New South Wales – and that is the analogue of section 85ZZHC:

permitted the tribunal to have recourse to a wider range of materials than was before the Commissioner –

for Police who made the original decision:

and must apply according to its terms, in the absence of some implied qualification according to the function being exercised by the tribunal.  

So relying upon the principle in Drake that the question before the Tribunal is whether the Commissioner made the correct decision on the material before the Tribunal, Justice White continues – which is referred to at the Full Court at paragraph 111:

No different function is imposed on the Tribunal. The Tribunal is required to have regard only to those considerations which would be relevant to the Commissioner’s decision.  But because of s 16 of the Criminal Records Act the Tribunal is entitled to have regard to more materials than are available to the Commissioner in deciding whether it should be satisfied that the applicant is a fit and proper person who can be trusted ‑

et cetera, and the Full Court endorses that reasoning at paragraph 116:

In our respectful view, the reasoning of White JA is persuasive. Section 43(1) of the AAT Act, read in conjunction with s 25(4A) and Drake, prescribes the task of the Administrative Appeals Tribunal to be essentially the same as the task imposed on the Administrative Decisions Tribunal by s 63(1) of the ADT Act.  The principle stated by Bowen CJ and Deane J in Drake is that the question for the determination of the Tribunal is not whether the decision which the decision‑maker made was the correct or preferable one on the material before him –

or her:

The question for the determination of the Tribunal is whether the decision was the correct or preferable one on the material before the Tribunal.

KIEFEL CJ:   But that is considering the question of evidence, is it not?  Are we not in a different sphere?  The real question is what law applies to the tribunals?  Is it limited to the law which framed the power of the original decision‑maker, not materials or evidence; that is a different point, is it not?

MR O’BRYAN:   It is.  Indeed, that lies at the heart of the steps in the appellant’s argument, which I might summarise in these ways.  The appellant says that the Full Court’s reasoning misapplies the principle stated in Drake for precisely the reason that your Honour has articulated.  Broadly, two principles emerge from Drake and, indeed, from Shi, this Court’s restatement of the principles.

The first principle which is recorded there is that the AAT is an administrative body charged with the function of conducting a de novo review and as such, barring any legislative direction to the contrary, the decision is made on the facts and circumstances that exist at the time of the AAT’s decision, not at the time of the original decision, and the decision is made on the materials available to the AAT at that time.  That is what is meant by that statement cited from Chief Justice Bowen and Justice Deane in paragraph 116.

The second principle that emerges from Drake and Shi is that, in making its decision, the AAT stands in the shoes of the original decision‑maker in the sense of being bound by the same legal constraints as the original decision‑maker, including as to relevant and irrelevant considerations and statutorily mandatory irrelevant considerations as well, which is the second principle.  It is the second principle that we say that the Full Court failed to apply.

When that principle is applied properly – I will develop these arguments when we go to the statute – one can see tension between the operation of section 43 of the AAT Act, properly applied in this case, and a literal interpretation of section 85ZZH(c). Just taking its literal meaning, it creates tension in this case. We say that that tension ought to be resolved in favour of confirming that section 43 of the AAT Act was intended by Parliament ‑ ‑ ‑

KIEFEL CJ:   When you say a literal meaning of 85ZZH(c), are you accepting that the decision referred to in paragraph (c) includes not only a decision of a tribunal for its own purposes, as in it being an original decision‑maker, but extends to a tribunal acting under statute to undertake a merits review of an original decision‑maker?  Do you not have to tease out what the word “decision” means?

MR O’BRYAN: Yes. I am probably approaching it in a different way. The construction for which we contend is the one that your Honour has just adverted to, which is that we say that the proper construction of section 85ZZH(c) is that ultimately “decision” within that paragraph does not mean a decision of the kind we have here on review under the AAT Act in those circumstances.

KIEFEL CJ:   If that is so, you have no clash, have you?

MR O’BRYAN:   The clash, we say ‑ ‑ ‑

KIEFEL CJ:   The question then becomes whether or not that is the correct construction of 85ZZH(c).

MR O’BRYAN:   Yes, that is so. 

KIEFEL CJ:   Which path are you taking, or are you taking both?

MR O’BRYAN:   It resolves the potential for clash.

KIEFEL CJ:   A clash does not arise.

MR O’BRYAN:   Yes, once that construction is adopted, that is right.

KIEFEL CJ:   Except in the way in which the respondent has said that there are some problems in, I think, its written submissions between 68 and 70. 

MR O’BRYAN:   Yes.

KIEFEL CJ:   It identifies some anomalies arising from that construction.

MR O’BRYAN:   Yes.

KIEFEL CJ:   But you have not dealt with that, so I thought you were not seeking to make good an argument about the meaning of “decision”.  I just want to know what your argument is.

MR O’BRYAN:   Yes.  We get to that conclusion – the difficulty we concede is that the task of statutory construction is, plainly, to serve the meaning.  If a literal approach is taken to ZZH(c) one can see the potential of a clash.  And we say that, having regard to the purpose text history of Part VIIC of the Crimes Act one can arrive at a conclusion that Parliament did not intend ZZH(c) to operate in this circumstance because it would effectively be inconsistent with and override 43 of the AAT Act.  If it were to be construed that way it would override 43 of the AAT Act and one cannot discern any legislative intent to bring that about.

BELL J:   Mr O’Bryan, in your reply at paragraphs 5 and 6 you deal with the question of inconsistency and, as I understood your argument, it was that the contention of inconsistency is misconceived because, one, the Tribunal is making a de novo decision, it is a re‑exercise of the power conferred on the original decision‑maker, subject to the legal constraints upon that original decision.

MR O’BRYAN: Certainly, we are making that argument, your Honour, that what 43 brings about or what 43 requires the Tribunal to do is to remake the decision – really, it has a number of ‑ of course, the Tribunal can affirm the decision below. It can vary the decision below. It can remake the decision below or it can send it back to be done again. The Tribunal has those powers but, when it is doing those things, we say that the construction of section 43 that has been adopted by this Court, and the Full Court before, is that it is doing that in the sense of standing in the shoes of the decision‑maker below. It is a question of what that euphemism really means. But it really means being bound by the same legal constraints.

GORDON J:   Is that not the critical aspect of it – is identification upfront of what are the critical legal constraints?

MR O’BRYAN:   Yes.

GORDON J:   If one goes to section 80, one looks at it, one finds, does one not, that one of the constraints is, in a sense, that the limitation that is set out in section 85 of the Crimes Act is part of the constraint.  It forms part of the section.  It tells you it is subject to this constraint and that constraint is carried forward.

MR O’BRYAN:   Yes.

GORDON J:   So when you talk about in your outline “Part VIIC required ASIC to disregard the spent convictions” is it not section 80 itself that requires it to be disregarded?  Section 80 says, subject to the Crimes Act.  It incorporates, it is part of the legal constraint.

MR O’BRYAN:   That is so, your Honour.

GORDON J:   So once you have got that as a legal constraint, is not your argument that that constraint is carried forward?

MR O’BRYAN: It is. Well, it is precisely that. What is said in opposition to us is that what section 43 requires of the Tribunal is to re‑exercise the power, subject to the same legal constraint. But what is put against us is that constraint differs, whether the power is being exercised by ASIC or whether the power is being exercised by the Tribunal.

GORDON J:   I understand that.  But if you go back to the analysis in Shi, one of the things is to ask: what is the question that was determined by the relevant authority? Well, we need to start, do we not, with the question? As I understand your argument, you accept the question is framed by section 80, which concludes as a constraint that is set out in the Crimes Act.

MR O’BRYAN: That is so. So the argument starts precisely there. That was the obligation that ASIC was under and we say it follows from section 43 that that also was the obligation that the Tribunal was under and precisely the same obligation that the Tribunal was under.

KIEFEL CJ: On that argument, does section 327(1) of the National Consumer Credit Protection Act have something to say, because it is the provision that allows an application to be made to the AAT for review of a decision made under the Act. 

MR O’BRYAN:   Yes. 

KIEFEL CJ: So you read that with section 43, do you not?

MR O’BRYAN:   That is so.  That is the enabling enactment as is referred to.

KIEFEL CJ: Well, without it you do not get to section 43, and it tells you which decision you are looking at.

MR O’BRYAN: That is right, your Honour. So section 25, of course, creates the power for section 327 to be enacted. 327 is the enactment referred to in section 25 of the AAT Act and that takes you, of course, then to section 43 which then defines the powers.

Section 25, of course, sets out the scope of what – or defines what decision is being reviewed, and section 43 then defines what powers are exercisable by the Tribunal in reviewing that decision.

GAGELER J:   Mr O’Bryan, can I just take you up on this. I interpret it as a concession, that there is some conflict or tension between section 43 and section 85ZZH. For my own part, I cannot see it.

MR O’BRYAN:   Yes.  I now feel like I should withdraw this concession very rapidly, but if I could explain what I meant.

GAGELER J:   Can I tell you why I do not see it because I read the opening words of the chapeau which say “Division 3 does not apply” and then I read down to relevantly the AAT, for the purpose of making a decision under section 43.

Now, if Division 3 does not apply, Division 3 simply has nothing to say about the AAT making such a decision and you just go to the terms of section 43 and the Tribunal stands in the shoes of the original decision‑maker and remakes a decision under section 80. Frankly, I cannot see the conflict.

MR O’BRYAN:   Yes.

GAGELER J:   I think that is in your favour might I say.

MR O’BRYAN:   Yes, I see that is to ‑ ‑ ‑

GAGELER J:   It is just a very simple way of looking at the provision.

MR O’BRYAN:   Yes, your Honour.  And I accept the force of what your Honour says and if I can with the Court’s ‑ withdraw the concession.  I was trying to articulate where I perceive the problem in the Full Court’s reasoning and where the Full Court’s reasoning went wrong.  I can see I made a concession too early in doing that, but it was to identify that the Full Court’s reasoning proceeded on a – so, with respect, a false premise of the freedom of the Tribunal, in a sense to receive new material and any legislative power that would enable it to receive fresh material, ought to be given effect to. 

But the Full Court’s reasoning failed to address the real requirement of section 43, which is the requirement to stand in the shoes and remake the decision in that way and in precisely the same way as ASIC did, and if that is recognised then it does follow, in my respectful submission, that the Tribunal’s task is so confined.

Can I add one other point to that? It is not only given force – that conclusion not only given force by section 43(1), but also given force by subsection (6) of section 43 which refers to the Tribunal’s decision being “for all purposes”, the decision of the original decision‑maker. Those words “for all purposes” are significant in the sense that one might imagine the statute might have said the decision of the Tribunal is deemed to be the decision of the original decision‑maker for the purposes of the enactment under which it has been made, something of that kind. But it goes much further than that and it is “for all purposes”.

It is only to make the point that what section 43 reveals is a legislative intent that the Tribunal’s decision is to be wholly consistent with, coincident with the powers that were given to the original decision‑maker.

GORDON J:   Do you accept that – one of the powers the AAT has is to remit.  The position is, is it not, that if the decision of the Full Court was right if it was remitted by the AAT in a sense the test or the legal framework would be different between the two of them.  It would be remitted back to ASIC and they would be then looking at it again on a different basis because they would not be entitled to take into account the spent conviction.

MR O’BRYAN: Yes. We do say that and it is one of the anomalies that we say would arise from a construction that would see section 85ZZH(c) given force in a sense – construed in a way that would enable the Tribunal to take into account different material compared to ASIC.

GORDON J:   You keep saying different material, but I do not know whether it is different material or it is subject to different legal question.

MR O’BRYAN:   Yes.

GORDON J:   I think it is the first question the Chief Justice asked you.

MR O’BRYAN:   Yes.

GORDON J:   It is not a question of material, is it?

MR O’BRYAN:   No.

GORDON J:   It is a question of what the legal framework is for the question to be posed and then answered.

MR O’BRYAN:   That is so, your Honour.  “Material” is an inapt word to use.  It is the constraint – and the mandatory irrelevant consideration which is the spent convictions.  Whilst accepting the force of – I think what has been put to me both by the Chief Justice and by Justice Gageler, I still anticipate an argument being advanced by ASIC and, perhaps, I can simply deal with it in reply and it might be convenient to deal with it in reply – and the argument being that there is another construction of 85ZZH(c).

KIEFEL CJ:   Perhaps it is best if you deal with it in reply.

MR O’BRYAN:   Deal with it in reply, thank you.  Otherwise, unless there is anything else I can assist the Court with I rely on the written submissions.

KIEFEL CJ:   Yes, thank you, Mr O’Bryan.  Yes, Mr Lloyd.

MR LLOYD:   As I will develop, we say the requirements imposed by Part VIIC of the Crimes Act operate differentially upon the nature of the decision‑maker by the substantive provisions of Part VIIC. So, critically, in this context, that means Part VIIC, we say – putting aside section 43 – and I should make it clear, we accept that this case is probably about how section 25 and 43 operates, not about Part VIIC. But the starting point is – and it is critical to our approach - that Part VIIC involves a differential operation turning on the nature of the decision‑maker. So, tribunals and courts are dealt with differently to regulators.

I will refer in my submissions to the “differential operation”.  What I am talking about when I use that expression is I am saying that in the scheme of Part VIIC, the Parliament has decided to allow courts and tribunals, relevantly here the AAT, we say, to have regard to some material that ASIC, in this case, was bound to disregard.

KIEFEL CJ:   But in that regard, the words, “For the purpose of making a decision in relation to a tribunal” could they be read – as I think one of the possible constructions you refer to in the written argument is that it might be read - with respect to a tribunal, not to include, “for the purpose of making a decision reviewing the decision of another decision‑maker”, that is to say that paragraph (c) refers to the case where a tribunal, not the AAT, but a tribunal is making a decision which it is empowered to make for the purposes of its legislation, where it is the original decision‑maker.  That would potentially take away any differential application, would it not?  But you say that it must necessarily comprehend the AAT.

MR LLOYD:   We say that the reference to “a tribunal established under a Commonwealth law” - in 1989 the pre‑eminent Tribunal established under the Commonwealth law was the AAT.

KIEFEL CJ:   Yes.

MR LLOYD:   It would be exceptional if Parliament did not think it operated to that Tribunal.

KIEFEL CJ:   You would have expected clearer words.

MR LLOYD: In the end, and I would have to say, for my part, I had misunderstood exactly – I should not say how my friend put it, but how Mr Frugtniet put it below – it seems to have evolved. We are not saying that somehow Part VIIC overrides section 43 or that there is any inconsistency between them or that one needs to be read down. We just say you would read Part VIIC. As my friend says, literally it would apply to the AAT, and it would apply to every State and Territory tribunal.

There is a broad‑brush approach and we say that it is premised upon Parliament’s judgment which was made apparently in the context of discussions with the various States and Territories, some of which at least have a similar scheme, to say that members of courts and tribunals, in effect, have enough experience in decision making that they can be trusted to give appropriate weight to spent convictions.  So the limitation which is imposed on other people including ASIC, but all Commonwealth authorities, is not to be applied to tribunals.  Now, that is all we really get out of Part VIIC, that there is a differential operation.

GAGELER J:   Well, the differential operation is a non‑application of a prohibition.  It is not a positive grant of authority at all to the jurisdiction.

MR LLOYD: That is so. That is why we are not saying that section 43 was somehow repealed by section 85ZZH(c). So we are not saying, not surprisingly, that Part VIIC does not say tribunals have to consider them. If it said tribunals had to consider spent convictions, then there might be a tension with section 43, if section 43 had the effect that it could not consider them – then there would be tension. But we do not say that, that is not any part of our case.

We just say Part VIIC operates – well, it creates in Division 3 a number of obligations, but critically for this case it is the obligation that requires Commonwealth authorities to disregard spent convictions. It also empowers the person who has the spent conviction to lawfully, but factually, inaccurately deny the existence of them.

Now, it does that but that is then subject to Division 6. Division 6 is not done on a subject matter basis – it is to some extent, some of the exclusions are done on subject matter bases ‑ but there is also the exclusion in relation to tribunals. In a sense, that is all we get out of Part VIIC. Then we have to go to see how section 25 of the AAT Act, section 43 of the AAT Act and section 80 of the Credit Act deal with the fact that there is a regime of constraint imposed by Parliament which has this differential operation.

I had initially thought I would take the Court to some more of the provisions but I think that is probably enough.  I do not think anything I have said is controversial, as to how Part VIIC operates.  We give in our written submissions some references to the idea that it is a parliamentary choice in relation to distinguishing between the tribunals.  I will not take the Court to them but in Kocic, at tab 15 of the bundle, paragraphs 66, 135 and 138 are all premised upon that.

We also have included in the bundle the Australian Law Reform Commission Spent Convictions Report.  That is in tab 23 and there are references at page 546 and 547 to the reasons why tribunals and courts are dealt with differently and we embrace that.

Against that background, I then move to the AAT Act. We do not dispute that the combined effect of sections 25 and 43 of the AAT Act is that, when an application is made, the Tribunal has power to review a decision made by ASIC under section 80 of the Credit Act; further, that in undertaking that review the Tribunal has access to the same substantive and procedural powers that were available to ASIC when it made its decision.

Depending upon what decision is made by the Tribunal, its decision may or may not amount to an exercise of power under section 43 or under section 80 of the Credit Act. If I just give the Court a reference to that, again I do not think anything turns upon it.

There is, having reviewed the cases, some scope for a greater clarification of how section 43 and section 25 actually operate. If I take the Court to Shi, which is under tab 20, and to page 489 of the bundle – this is in the joint judgment of Justices Hayne and Heydon – in paragraph 100 their Honours embrace a passage from what Justice Brennan said, when he sat as the president of the Tribunal in Brian Lawlor.

One sees there an analysis whereby the power in section 43(1)(a) and 43(1)(c) ‑ a power to affirm or the power to reconsider is – sorry, a decision to affirm or a decision to reconsider is made under the section 43 power, but if a decision is made to vary the decision or to set it aside and substitute another decision, that may also involve an exercise of the section 80 power.

That deals with where the powers come from.  What their Honours go on to say is that the task of the Tribunal is:

“to do over again” what the original decision‑maker did.

It may be that that concept is better understood as arising from the word “review” rather than the language of section 43 itself because section 43 seems to be about empowering the Tribunal to make decisions of a certain kind, the power to review, which is in section 25(4) of the AAT Act.

It was if that was construed to say that what “review” means is to review the decision that was made, not from a view of looking at errors but to, in effect, do a de novo review, start again, do over again and decide whether the decision was the correct or preferable decision.  In a sense, the characterisation of it being correct or preferable is something you only reach at the end of the task. 

If you are the tribunal, you do the decision over again.  You might have different evidence before you.  Different arguments might be put.  You come up with what you think is the correct or preferable decision.  If it is in fact the same decision as the decision under review then you affirm it.  If it is a different decision you either vary it or set it aside and substitute a new one or, for some reason if you cannot make a decision or you do not want to make a decision you might remit it for reconsideration.

In a sense, section 43 is directed to that. You have already undertaken the review before you have made the decision on the review, and probably the content of what the Tribunal has to do is built into the word “review” in the same way as “appeal” in the Constitution is construed as “appeal” in the strict sense. That is what tells what this Court can do. “Appeal” in other places has been said to be appeal by way of rehearing. That is a different way. It is a matter of construing it.

None of what I have just said is meant to dodge the point.  We accept that the cases indicate that what the Tribunal was meant to do is do over again what ASIC had done.  There is a metaphor about standing in the shoes.  We do not depart from that, but maybe one point of distinction – I note that this point of distinction only has significance in this kind of case as it has never come up before – is that we would say that when the Tribunal stands in the shoes of ASIC it is still the Tribunal.  It is not ASIC, it is the Tribunal undertaking the review as the Tribunal but facing the same powers and constraints on power that ASIC faced.

GAGELER J:   And its decision is deemed to be the decision of ASIC, is it not? 

MR LLOYD:   The decision is ‑ that is of course after it is finished.  It is not for all purposes, so for present purposes it is not deemed to be a decision of ASIC because it is on review.  An exception to 43(6) is that in relation to appeals it is not deemed to be a decision of ASIC.  For present purposes it is a decision of the AAT. 

But it is true that, ultimately, the decision is deemed to be a decision of the decision‑maker and that is because many acts will have consequential things that happen upon a decision and by deeming it to be a decision of the decision‑maker all those consequential things are triggered, and it has that function to play and we do not say that that presents any problem for us.

So, accepting that much, we then have to go to section 80. If I can take the Court to section 80 of the Credit Act, which is in the bundle under tab 5. It is on page 87 of the bundle. It says:

ASIC may make a banning order against a person –

and then it identifies eight grounds.  The relevant ground for us is (1)(f).  This provision turns on whether or not:

ASIC has reason to believe that the person is not a fit and proper person to engage in credit activities –

In substance, it turns on the state of mind of ASIC or its delegate on review to the AAT, the same condition is met if ASIC has reason to believe.  So, on review, it is standing – sorry, if the Tribunal has reason to believe.  So, in that sense, the combined effect of sections 25 and 43, and the “standing in the shoes” metaphor is that, on review, the AAT decides whether it – on the material before it:

has reason to believe that the person is not a fit and proper person to engage in credit activities ‑

Now, subsection(2) applies when a decision under section 80(1)(f) is being considered or, we would say, reviewed. It then identifies five categories of mandatory relevant considerations. They are mandatory considerations for ASIC when it is deciding the decision whether or not to exercise power. Likewise, we accept that they are all mandatory considerations for the AAT. That is just another example of AAT standing in the shoes of ASIC. It is the same power, the same mandatory relevant considerations. The relevant consideration in 80(2)(d), namely:

any other matter ASIC considers relevant –

If I just stop to stay it is a fairly curious provision to make something like that a mandatory relevant consideration.  So if you consider it relevant you are bound to have regard to it.  Presumably, if you do not consider it relevant you would not have regard to it, anyway.  But that is what it says and it has some significance here.  So if ASIC considers a matter to be relevant, it must be have regard to.  So if ASIC considers X, Y and Z to be relevant, it must have regard to them.  On review, this category, we say, turns on what the AAT considers to be relevant.

BELL J:   In what circumstances could the AAT consider it relevant to have regard to a spent conviction in the determination of the fitness and properness of a person to engage in credit activities in circumstances in which the Parliament has determined that a spent conviction is not a consideration to be taken into account by the person charged with making the determination, that determination being the subject of review?

MR LLOYD:   I was getting there.  What we say is just how the revision – I want to come to how the words “subject to Part VIIC” - what the significance of that is - work.  But what we say is this is a duty on ASIC at first instance to have regard to the – and say ASIC thought that a spent conviction was relevant.  So, on its face, it would be under a duty to have regard to that spent conviction but that duty is subject to Part VIIC.  ASIC is bound by Part VIIC to disregard spent convictions and so to that extent, the later – the special regime of Part VIIC – because it has priority over what ASIC considers to be relevant and so that is how it works for ASIC.

When the AAT comes, we say that in 80(1)(d), the reference to what “ASIC considers relevant” cannot be a reference to what ASIC had originally considered to be relevant.  It is a reference to what the AAT considers to be relevant.  So, in this case, Mr Frugtniet – well, let us not look at this case – in a case, a person might bring forward a whole lot of new evidence to the AAT and the AAT might consider that to be relevant.

BELL J:   That is accepted, Mr Lloyd, but what we are looking at is the consideration, not of a whole raft of new material that might be generally on fitness and properness – but the capacity under this statutory scheme for a spent conviction to bear relevantly on the determination of fitness or properness, given that the boundaries fixed by the provision exclude, for the purpose of the making of the decision, reference to a spent conviction.

MR LLOYD: We would dispute that it does do that. What we say is that – in relation to the subject matter we say nothing in section 80 says that spent convictions could not be relevant. It just makes it subject to the operation of Part VIIC. So, there is nothing in Part VIIC that says spent convictions could never be relevant to this kind of thing and the fact that there is an exception for tribunals and courts suggests there will be instances where spent convictions might be relevant to this kind of thing.

EDELMAN J:   Does your submission really ultimately come down to the point that sections 25 and 43 of the AAT Act do not, in their reference to review, contain an implicit prohibition upon the reviewing party, the Tribunal, having regard to considerations that were irrelevant to the primary decision‑maker.

MR LLOYD: Yes. We say what 25 and 43 do is they direct the AAT to the same legal constraints, the same power and the same legal constraints. We say that here the power is under section 80(1)(f). The legal constraint is 80(2)(d) in the sense that it is not so much a constraint but it is a duty to consider certain things. So, if the AAT considered the spent convictions to be relevant, it is then found to have regard to them. That is the effect of 80(2)(d).

But it being bound to have regard to them is subject to Part VIIC.  So one then has to look to see how Part VIIC operates in relation to the Tribunal and so, for the reasons I said earlier, Part VIIC does not constrain the Tribunal.  So our answer to your Honour Justice Bell’s question is that Parliament has chosen this formulation subject to Part VIIC.  Parliament should be taken to have known that that constraint imposed by Part VIIC has a differential operation depending upon the nature of the decision‑maker and they chose this language. 

Now, there are other instances where Parliament wanted to choose a different way and we give some examples in our submissions.  I will take the Court just to one.  So, it is a closely analogous one.  It is under tab 9 of the bundle.  So, in tab 9, page 184, one sees section 290.  So this is a power not to register – a power of MARA not to register migration agents and it must not do so if it – has a state of satisfaction about fit and proper.  Then in considering that it must take into account in (2)(c), “any conviction of the applicant” and then at the end of (2)(c), one sees:

(except a conviction that is spent under Part VIIC of the Crimes Act 1914) -

Now, when the AAT comes to review this decision, it is subject to the exact same constraints.  We embrace that but we say when it is made subject to this formulation, a conviction that is spent, that just brings up the concept of what falls within the definition of a “spent conviction” under Part VIIC and that applies equally to the Tribunal and to MARA in that case.

In the present case, Parliament has chosen to make it subject to the whole of Part VIIC.  That includes the exclusions from Part VIIC which apply to the Tribunal.  So when the Tribunal comes on review, standing in the shoes of ASIC, but still as a Tribunal, that is the nature of it as a decision‑maker, it is subject to the same – has the same powers, subject to the same mandatory considerations, albeit that the scope of those mandatory considerations will vary because the AAT might consider different things to be relevant, but in relation to spent convictions, it is subject to Part VIIC which we say just means subject to the operation of Part VIIC. 

Because Part VIIC does not apply to the Tribunal, or at least does not bind the Tribunal to not consider – or to rather disregard spent convictions then it does not bite.  That means the Tribunal is then left in the position where it must consider anything it considers relevant, must have regard to anything it considers relevant.  It did consider the spent convictions to be relevant.  It was then bound by the Act to consider that and it was not excused from doing so, or required not to do so by the operation of Part VIIC.  That is basically our case.

GAGELER J: Mr Lloyd, that comes down to say taking section 80, which is described as concerned with ASIC’s power to make a banning order, and reading it as directed to ASIC’s and the AAT’s power to make a banning order and as directed to making it clear, by those bracketed words, that there is a differential operation between the powers of those two bodies. That is a comment, rather than a question, but that is as I interpret the effect of your submission.

MR LLOYD:   That is fair, that is the effect.  We would say that Parliament would have known – because when it was drafting this Act, it was also drafting 327.  It would have known this was subject to merits review.  It would have known that the AAT is subject to the same legal constraints.  Here it has chosen a legal constraint that operates differentially, and there is no reason to think that that was not fully intended.

GAGELER J:   If the true construction of the bracketed words is that they are directed solely to the power of ASIC, you have nothing to say, have you?  I mean, that is the end of your argument.

MR LLOYD:   If the proper view is that making it subject to that constraint – or rather, if the proper view of sections 25 and 43 is that it directs the Tribunal not only to stand in the shoes of ASIC but to be ASIC when one stands in the shoes of ASIC, then that constraint would not apply differentially to the Tribunal because for the purposes of that point ‑ ‑ ‑

GAGELER J:   Let us separate those two things out.  You have an argument just based on the bracketed words in section 82, as I understand it, what they are directed to.  Then you have another argument based on, what, the general operation of sections 25 and 43, the effect of which, as I am understanding you now, is that wherever you see “ASIC” in the original decision‑making power you mechanically read in “AAT”?

MR LLOYD: I am not saying that because there may be instances where that is not the case. For example, under section 80(1)(a), the AAT on review would have the power to make a banning order because ASIC previously had suspended it; so it is not every instance. So we do not understand anyone to have said sections 25 and 43 operate mechanistically. The point is that the Tribunal is intended to have the same powers, subject to the same constraints. What is unusual in this case, not considered in Shi or Pochi or any of the previous cases, is that there is a regime that distinguishes, in a kind of substantive way, between what tribunals should be permitted to consider, and what other regulators should be permitted to consider.

So the question is, when one has regard to the normal operation of 25 and 43, which directs you to the section, and it makes it subject to Part VIIC, which includes a regime in itself which has a differential operation - so it is the embracing of, we would say, the provision that has a differential operation, then it should be construed according to its terms that when the AAT does it, it has to say, “I consider spent convictions to be relevant - 80(2)(d) tells me I must have regard to those spent convictions”.

It then goes to:  but that duty is subject to Part VIIC.  How does Part VIIC apply in this context?  Well, I, the AAT, am a tribunal.  Parliament made a distinction in Part VIIC between tribunals and other decision‑makers so it does not remove the duty.  That is really it.

NETTLE J:   Mr Lloyd, could I ask you to go back to 290 of the Migration Act to which you took us.  I did not quite appreciate the subtlety of the point.  As I understood the submission, it was that if Parliament had in relation to the subject legislation adopted a formulation such as this it would be different in the present case.  Was that it?

MR LLOYD:   That is so.  What one sees in the 290 context, where it says:

(except a conviction that is spent under Part VIIC –

then the AAT, on review, would say is this a conviction which is a spent conviction within section 85ZM?  If the answer is yes then it does not engage 85ZZH(c).  It has to face the same constraints as the Tribunal.  In this case, in the section 290 case, Parliament has not chosen to embrace the differential operation that is entailed within Part VIIC; rather, it has chosen this particular formulation.  There are other formulations ‑ ‑ ‑

NETTLE J:   Does that say any more than that in this particular formulation in the Migration Act there is not an equivalent of 85ZZH(c)? 

MR LLOYD:   Would your Honour ask that question again?

NETTLE J:   Is it to say any more than that in this Migration Act 290(2)(c) there is no equivalent of section 85ZZH(c)?

MR LLOYD: Section 85ZZH(c) is in Part VIIC, so it would have – let me put it a different way. Maybe this is an answer to your Honour’s question. If, instead of saying except a conviction that is spent under Part VIIC, it had said, “Subject to Part VIIC,” we would then say that would bring the differential operation of Part VIIC into account; 85ZZH(c) would be engaged. So when the Tribunal reviewed a decision of MARA it would not be required to disregard spent convictions. But in this case Parliament decided that the Tribunal on review should be limited to not having regard to spent convictions, so it expressly says that by making the limitation the subject of spent convictions, even though the Tribunal would not have been subject to it otherwise.

EDELMAN J:   Is there any other legislative example where the Tribunal is permitted to have regard to a consideration that was irrelevant by the primary decision‑maker?

MR LLOYD:   We given in our submissions some references to other provisions which have the result of having the AAT be subject to different constraints.

KIEFEL CJ:   Is this in your footnote 20?

MR LLOYD:   I think it is, your Honour, thank you.  We do not have them here, but my recollection is that in the Lands Acquisition Act case the considerations available to the Tribunal are different to the considerations available to the primary decision‑maker in some respects – or, at least, it is not just a procedural difference, it is a substantive issue difference. So there are instances. There are certainly other instances where this current formulation is used. So, to that extent, we would say that this case does not apply only to section 80. I think a similar formulation is used in the Corporations Act.  I have not looked broader than that but I think the idea of making things subject to Part VIIC is elsewhere.

So, if your Honour is asking me – apart from the issue of spent convictions I think it would be fair to say that it would be a pretty rare thing for the Parliament to distinguish between what a regulator should have regard to or what a tribunal should have regard to. But it has done that in Part VIIC. Section 80 should be construed having regard to the fact that that scheme existed and draws that distinction. I think I have probably covered everything, but if I could just have a moment. May it please the Court, they are our submissions.

KIEFEL CJ:   Thank you.  Yes, Mr O’Bryan. 

MR O’BRYAN: If the Court pleases. The appellant does embrace in a sense the shorter argument that has been revealed through argument from the Bench, particularly from Justice Gageler. We do say correct construction of section 80 is the power to make a banning order is given to ASIC and when the Tribunal comes to review a decision of ASIC, it had that power that the Tribunal is subject to the constraints applying to ASIC.

The approach on review and the powers exercised by the Tribunal is not an approach by which one strikes out the word “ASIC” from the section and writes in the word “Tribunal” and perceives the power as if the section had been rewritten – that the Tribunal now has power to make a banning order and particularly subsection (2) is rewritten to refer to the Tribunal and Part VIIC then takes effect in that way. 

We say that that is not what the Tribunal is doing in conducting a review under the AAT ACT.  It is doing again what ASIC did.  The power is ASIC’s and the constraints were the constraints that applied to ASIC.  In

that sense, the Tribunal is bound by the constraint that ASIC was bound by and that is found in Division 3 of Part VIIC to not take account of the spent convictions and in that sense Division 6 which simply says “Division 3 does not apply to decisions of the Tribunal” does not operate in those circumstances.

The only other matter I wish to address is to say something short about the different formulation of words in the Migration Act.  There is a different formulation of words there that my learned friend referred to.  We do address this in our written submissions.  If there be a reason for the different formulation of the words – I am sorry, that is going back to tab 9 and section 290 of the Migration Act which is on pages 184 and 185, and the words in parenthesis there are:

(except a conviction that is spent under Part VIIIC –

I simply note – and as we noted in the written submissions, there is a general exclusion for the purpose of the Migration Act under the Crimes Act, if I could refer the Court to Part VIIC of the Crimes Act behind tab 4 and section 85ZZH(d) which is in Division 6 is a general exclusion for persons who make decisions under the Migration Act. Because of that general exclusion, generally Division 3 does not apply to decisions under the Migration Act.

The effect of the words in parenthesis in section 290 is in a sense to expressly invoke Division 3 under the Migration Act because it otherwise would not apply. So there is a reason for a different formulation of words, which is to invoke something that otherwise would not apply. There is no similar need in the case of ASIC because there is no general exemption under section 85ZZH(c) or Division 6 generally for ASIC. There are some other exceptions that do not apply in this context, but that explains a slightly different formulation under the Migration Act.

For that reason, we also say that the effect of the words in parenthesis, whether under the Migration Act or under the NCCP Act, is to the same. The words in parenthesis speak to the decision‑maker. In the case of ASIC, under section 80 it is speaking to ASIC and ASIC under Division 3 of Part VIIC is precluded from taking into account spent convictions. Unless there is anything else I can assist the Court with ‑ ‑ ‑

KIEFEL CJ:   Thank you.  The Court reserves its decision in the matter and adjourns to 10.00 am on Tuesday, 12 February 2019.

AT 10.52 AM THE MATTER WAS ADJOURNED