Gillespie and Australian Securities and Investments Commission
[2012] AATA 779
•8 November 2012
[2012] AATA 779
Division GENERAL ADMINISTRATIVE DIVISION File Number
2012/5006
Re
Ricky Gillespie
APPLICANT
And
Australian Securities and Investments Commission
RESPONDENT
DECISION
Tribunal Senior Member Bernard J McCabe
Date 8 November 2012 Place Brisbane The decision to impose a stay on publication pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975 is set aside as of 10 am on 9 November 2012. It is not appropriate to make further orders under s 41(2) nor is it desirable to make an order under s 35(2).
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Senior Member Bernard J McCabe
CATCHWORDS
PRACTICE AND PROCEDURE – application for a stay on the implementation of the decision – application for orders preventing publication of the decision on the public register – banning orders in relation to the provision of financial services – danger that the hearing will be rendered nugatory – damage to the applicant's reputation and employment prospects – interests of the public in being fully informed.
LEGISLATION
Corporations Act 2001 (Cth) ss 920A and 920B.
Administrative Appeals Tribunal Act 1975 (Cth) ss 41 and 35.
CASES
Australian Securities and Investments Commission and Administrative Appeals Tribunal (2009) 181 FCR 130.
Rent to Own (Aust) Pty Ltd and Australian Securities and Investments Commission [2011] AATA 689.
REASONS FOR DECISION
Senior Member Bernard J McCabe
8 November 2012
The applicant, Ricky Gillespie, provides financial services advice. He is currently employed by an accounting firm. On 30 October 2012, a delegate of the Australian Securities and Investments Commission (“ASIC”) decided to make a banning order so the applicant was permanently prohibited from providing financial services. That decision was made pursuant to ss 920A and 920B of the Corporations Act 2001 (Cth) (the Corporations Act). Mr Gillespie wants the Tribunal to review that decision.
ASIC provided a statement of reasons in conjunction with the banning order. Serious findings were made against the applicant: amongst other things, the delegate was satisfied the applicant had engaged in misleading or deceptive conduct, forged the signatures of clients and made false file notes.
Mr Gillespie learned of the banning order early this week when it was served upon him. His lawyers promptly applied for orders under s 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act) staying the operation or implementation of the decision – which included orders preventing ASIC from publishing the decision or making entries onto the public register which would ordinarily occur following a banning order, even if that order were stayed by order of the Tribunal.
The application for review and the application for a stay were received in the registry yesterday afternoon. An urgent hearing was set down for this morning after I issued a temporary stay under s 41(2) of the AAT Act. Mr Povey, an ASIC lawyer, appeared for the respondent. Mr Povey said ASIC opposed the Tribunal ordering a stay or any confidentiality orders. Mr Barlow of counsel appeared on behalf of the applicant. I am mindful that Mr Povey in particular was at a disadvantage given the time he had to prepare for the hearing.
There is no doubt the Tribunal has the power under s 41(2) of the AAT Act to make an order staying the banning order if it is satisfied it is appropriate to do so having regard to the matters referred to in the sub-section. The Full Federal Court accepted in Australian Securities and Investments Commission v Administrative Appeals Tribunal (2009) 181 FCR 130 (ASIC v AAT) that the power in s 41(2) extends to making orders preventing ASIC from publishing notices of the banning order and making entries on the public register: at [62] per Downes and Jagot JJ. Confidentiality orders might also be made under s 35(2) of the AAT Act to restrain publication.
I will deal firstly with the question of whether (further) orders should be made under s 41(2) before referring again to s 35(2).
The power under s 41(2) is intended to preserve the status quo so that the hearing can be effective. There is sometimes a danger that a hearing will be rendered nugatory if the original decision is implemented. The power to order a stay is discretionary. It can only be exercised where the Tribunal forms the view it is desirable to make the order “after taking into account the interests of any persons who may be affected by the review”.
In this case, publication of the decision will do significant damage to the applicant’s reputation and employment prospects. Given the serious nature of the findings made against him, the harm may be irreparable. I accept a final hearing may be rendered pointless because the applicant could be so damaged that he will have difficulty working in the industry again even if the banning order were overturned.
I note that any lasting damage will be done by publication of the fact of the banning order. The mere fact the applicant is prevented from working while the matter is being reviewed will not, of itself, render the final hearing nugatory.
What of the interests of the parties? The interests of the applicant will obviously be seriously affected if publication occurs. He outlines the expected impact of news of the banning order in his statement that was filed in conjunction with his application. His interests will clearly be served by making an order that publication be restrained. He would be even better off if the whole of the decision were stayed.
The interests of the applicant’s current employer must also be considered. I was told the principal of the firm is unaware of the applicant’s current predicament. She does not know of the banning order. I suggested at the hearing this morning that she would be aghast if news of the banning order were kept from her, whether the applicant was permitted to return to work in the meantime or not. As it stands, her interests would probably be prejudiced if a further stay were ordered because she would be placed in a potentially embarrassing position with respect to her clients. I asked the parties to consider whether it would be possible to consult her about how she would deal with the situation if a stay order were to be imposed. That could be achieved if the stay I ordered yesterday were to be extended for several days while evidence was obtained. (A delay of several days would also provide the parties – most obviously the respondent – an opportunity to argue the case more fully, although Mr Povey conceded the hearing I conducted today met the requirement that the parties be given the opportunity to be heard.)
The interests of the public in being fully informed about matters relevant to the investment advice they are receiving must also be considered. The policy evident in the Corporations Act demands that the interests of existing and potential clients be given very careful consideration. As the Full Court explained in ASIC v AAT, a proper consideration of those interests suggests a suppression order will rarely be appropriate because investors would rightly expect to be informed of such important news: at [53]-[55] per Downes and Jagot JJ. I have no doubt new investors would expect to be told of a banning order before they dealt with the applicant, but that would not be an issue if the applicant were prevented from working because the banning order would take effect while the Tribunal’s review was completed. But I expect existing customers who have already been serviced by Mr Gillespie would also expect to be told of the problems ASIC had identified even if he were not permitted to work while the review was completed by reason of the banning order. They would want the opportunity to seek reassurance that all was in order with their investments and they would be understandably upset if the Tribunal had prevented them from hearing of the concerns, even for a short period.
I have considered whether it would be appropriate to extend the stay on publication until a date next week when a hearing of stay can be reconvened and both parties can file material and call witnesses. I indicated I would only consider such a course on the assumption that the banning order itself was implemented and the applicant was prevented from seeing any new clients. That course has some appeal because it might enable the Tribunal to explore whether it was possible to fashion orders that permitted the applicant to preserve his reputation in the short term without compromising the interests of the investing public or his employer. But in making my decision, I am mindful of the Tribunal’s decision in Rent to Own (Aust) Pty Ltd and Australian Securities and Investments Commission [2011] AATA 689. In that case, Downes J and Deputy President Hack cautioned against “an overanxious desire to permit regulated activity wherever possible”: at [47].
In all the circumstances, I am not persuaded it is appropriate to order a further stay, (although I am prepared to allow the existing stay to remain in place until 10 am tomorrow (Brisbane time) so the applicant is not deprived of the right to appeal this decision in the Federal Court if he is minded to do so). I reach that view on the assumption he has an arguable case. While the consequences are serious for the applicant, the interests of the investing public (including the applicant’s existing clients) take precedence. ASIC must go ahead and do what it is required to do.
I would reach the same conclusion in relation to an application for a confidentiality order under s 35(2). The interests of the investing public suggest it would not be desirable to make an order notwithstanding the impact on the applicant, even assuming he has an arguable case.
CONCLUSION
The decision to impose a stay on publication pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975 is set aside as of 10 am on 9 November 2012. The Tribunal concludes it is not appropriate to make further orders under s 41(2) nor is it desirable to make an order under s 35(2).
I certify that the preceding 16 (sixteen) paragraphs are a true copy of the reasons for the decision herein of Senior Member Bernard J McCabe. ................................[Sgd].....................................
Associate
Dated 8 November 2012
Date of hearing 8 November 2012 Counsel for the Applicant Mr Barlow Solicitors for the Applicant Gilshenan & Luton Legal Practice Solicitors for the Respondent Mr Povey
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