Gould and Companies Auditors and Liquidators Disciplinary Board and Anor
[2007] AATA 1914
•2 November 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1914
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2004/1675
GENERAL ADMINISTRATIVE DIVISION )
Re Vanda Russell GOULD
Applicant
AndCompanies Auditors and Liquidators Disciplinary Board
First Respondent
AndAustralian Securities and Investments Commission
Second Respondent
INTERLOCUTORY DECISION
TribunalProfessor GD Walker, Deputy President
Date2 November 2007
PlaceSydney
DecisionThe applicant’s interlocutory application is dismissed.
...................[sgd]...........................
Professor GD Walker
Deputy President
CATCHWORDS … tribunal’s discretionary powers to regulate procedure and determine the scope of review – tribunal’s role is to determine the correct and preferable decision on the material before it not on the basis of the material which was before the original decision-maker – applicant’s interlocutory application is dismissed.
RELEVANT ACT/S:
Corporations Act 2001 (Cth): ss 25(4A), 33, 1292(2)
Corporations Law: s 829
Administrative Appeals Tribunal Act 1975: ss 2A, 25(4A), 33
Revised EM, Administrative Appeals Tribunal Amendment Bill 2005: Notes, 25(4A)
…
CITATIONS
Cresvale Far East v Cresvale Securities [2001] NSWSC 89
Re Wharton and Australian Securities and Investments Commission (2002) 69 ALD 419
Re Sleiman and Australian Securities and Investments Commission [2007] AATA 1383
Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1
Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125
Scott v Handley (1999) 58 ALD 373
Herron v McGregor (1986) 6 NSWLR 246
Walter Construction Group Limited v Fair Trading Administration Corporation [2005] NSWCA 65
Walton v Gardiner (1993) 177 CLR 378
Re Aerolink Air Services Pty Limited and Civil Aviation Safety Authority [2003] AATA 1357
Australian Broadcasting Tribunal v Bond (1990) 94 ALR 11
Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577
TVW Enterprises Limited v Australian Broadcasting Tribunal (1986) 11 FCR 293
Patrick v Capital Finance (Aust) Pty Limited [2003] FCA 206
Green v United States (1957) 355 US 184
Gill v Walton (1991) 25 NSWLR 190
National Australia Bank Limited v Nobile & Anor (1988) 100 ALR 227
…
REASONS FOR INTERLOCUTORY DECISION
2 November 2007
Professor GD Walker, Deputy President
Basic facts and issues
1. The substantive application before the tribunal is an application by Mr Gould for review of a determination of the Companies Auditors and Liquidators Disciplinary Board (the Board) dated 26 August 2004 (T 2.1).
2. In these proceedings the applicant has instituted an interlocutory application seeking a direction precluding the second respondent ASIC from relying on certain contentions it had sought to raise by way of amendment to its statement of facts and contentions (SoFaC) before the Board. In two rulings made on 10 June 2004 (T 27.4) and in its determination of 26 August 2004 (T 2.1), the Board refused ASIC leave to amend its SoFaC so as to incorporate the new contentions.
3. ASIC’s SoFaC before the Board dated 15 July 2001 sought the cancellation and suspension of Mr Gould’s registration as a liquidator, pursuant to s 1292(2) of the Corporations Act 2001 (Cth) (the Act).
4. The contentions followed certain criticisms made by Austin J in Cresvale Far East v Cresvale Securities [2001] NSWSC 89.
5. Following a successful challenge to those findings of criticisms in the Court of Appeal, ASIC filed and served three successive amended SoFaCs. The first was dated 13 February 2003 (the First Amendment) and a copy is attached to the applicant’s written submissions on this interlocutory application.
6. On 8 May 2003, ASIC filed and served an addendum to the First Amendment SoFaC raising contentions arising out of its investigation of Mr Gould’s conduct in relation to, inter alia, Popwing, Trinbay and Sisterella (the Second Amendment) (T3). That addendum was itself amended by a document dated 21 January 2004 (the Third Amendment) (T4).
7. At the end of the final day of the hearing before the Board on 20 May 2004, ASIC made a further application to amend contention 2.1 in the SoFaC (the Fourth Amendment). ASIC’s application to amend was first made during the closing submissions and after the close of the evidence.
8. It should be noted that ASIC’s SoFaC in this tribunal uses the same numbering for the contentions as was used in its SoFaCs before the Board.
9. The Board ruled against ASIC’s application to amend on 10 June 2004 (T 27.4).
10. After the hearing and the submissions had concluded, the Board by letter dated 8 July 2004 (referred to in document T 2.1 at para 6.7) invited further submissions from the parties concerning the meaning of s 1292(2)(d)(ii) and the appropriateness of contentions 6.4 to 6.7A and contention 8 being made under that paragraph.
11. ASIC’s submissions in response to that invitation included an application for leave further to amend the SoFaC so as to plead s 1292(2)(d)(i) in the alternative (the Fifth Amendment) (T 20, p1752). Mr Gould opposed that application in his submissions in reply.
12. In its determination of 26 August 2004, the Board refused ASIC leave to amend its SoFaC in the manner sought.
13. Mr Gould applied to this tribunal for review of the Board’s determination on 22 December 2004 (T 1, pp5-6).
14. In a covering letter dated 15 March 2005 to its SoFaC in this tribunal, ASIC explained that the new SoFaC pleaded the contentions in relation to which ASIC was successful at the Board hearing, as well as those contentions that were the subject of ASIC’s two unsuccessful applications to the Board to amend its SoFaC. Because the Board refused the two applications for leave to amend, those contentions were not dealt with by the Board in its final determination. ASIC seeks to rely on those contentions in its SoFaC lodged in this tribunal in respect of Mr Gould’s application for review of the Board’s substantive determination. Mr Gould seeks to have ASIC precluded from doing so.
15. The contentions that are the subject of this interlocutory application are, therefore:
§Contention 2.1, relating to the Trinbay external administration;
§Contentions 6.4, 6.5, 6.6, 6.7 and 6.7A relating to the Popwing external administration; and
§Contention 8, relating to the Marble external administration.
The applicant’s submissions
16. Mr Gould opposes ASIC’s proposed reliance on the new contentions on two grounds:
(i)That this tribunal lacks jurisdiction to include the new contentions in its review of the Board’s determination because the effect of s 1292(2) of the Act is to confine the scope of the review to the contentions contained in the original application by ASIC to the Board; and
(ii)That pursuant to its discretionary powers in s 25(4A) and s 33 of the Administrative Appeals Tribunal Act 1975 (the AAT Act), the tribunal should limit the scope of the review to the contentions properly raised by ASIC before the Board.
17. Those grounds are presented in the alternative or cumulatively.
18. In relation to the jurisdiction ground, the applicant submits that the prosecutorial role of ASIC before the Board limits the matters upon which the Board may base its decision. Pursuant to s 1292(2), the Board may issue an order only “on an application by ASIC”. The Board may not of its motion institute disciplinary proceedings against a liquidator, nor may any member of the public or some other body make such an application to the Board. The Board thus may not reach its required “satisfaction” concerning a person otherwise than on the basis of contentions advanced by ASIC in its application. The section states that the Board’s satisfaction must be “on an application by ASIC”.
19. Re Wharton and Australian Securities and Investments Commission (2002) 69 ALD 419 had no application, because under s 829 of the Corporations Law, with which the case was concerned, ASIC could issue a banning order on the basis of any one of a number of grounds. Consequently, when this tribunal takes the place of ASIC and reviews the correctness of ASIC’s decision under s 829, it may consider any other ground.
20. For that reason, the tribunal in Re Sleiman and Australian Securities and Investments Commission [2007] AATA 1383 should have distinguished Re Wharton instead of applying it to proceedings under s 1292(2) of the Act. It did not appear that the contrary view had been argued before the tribunal in Sleiman. Besides therefore being per incuriam, Sleiman was also distinguishable because it dealt with new material that had come to light only after the hearing (at para 6).
21. In relation to the tribunal’s discretionary powers to regulate procedure and determine the scope of the review pursuant to s 25(4A) and s 33 of the AAT Act, the applicant relied on the Board’s grounds for its two determinations refusing ASIC further leave to amend and submitted that this tribunal should adopt those reasons, especially as the Board was in a better position to be fully aware of the circumstances of the case and the implications of allowing the amendments.
22. Entertaining the new contentions was contrary to the public interest and would be unfair to the applicant. The tribunal must conduct its review correctly so as to serve the public interest. The Commonwealth’s obligation to act fairly towards the applicant is illustrated by a number of decisions, including Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1 at 40-42 per Finn J; Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125; and Scott v Handley (1999) 58 ALD 373 at [45]. The obligation to act fairly was all the greater because these are disciplinary proceedings of fundamental importance to the applicant’s reputation, livelihood, professional and possibly personal life. It would be contrary to the public interest and unfair to the applicant to allow ASIC to re-agitate matters that the Board ruled should not be pursued before it.
23. Again, the applicant would suffer irremediable prejudice, as the Board found, if the tribunal were to embark on a complete hearing of the new grounds at this late stage. The way in which the original hearing had been conducted could not be undone. Matters explored in cross-examination and answers given by Mr Gould were left on the basis of the case as then formulated. ASIC should not have the benefit of such answers for a different case that it could have presented from the outset but deliberately chose not to. The irremediable prejudice could not be cured in the review proceedings, and indeed would be increased because he would now have to face matters in 2007 that the Board thought would be unfair for him to face in June or August 2004.
24. He would have to consider for the first time allegations that in some instances dated back to 1998. The lapse of time must inevitably prejudice his ability to mount a defence to the new allegations. It was notable that in Herron v McGregor (1986) 6 NSWLR 246, the Court of Appeal stayed disciplinary proceedings on the ground of oppression and delay even though the legislation in question contained no time limitation for lodging a complaint.
25. The applicant was entitled to expect that the Board's hearing and determination had put an end to the contentions then rejected by the Board. While it was true that much of the delay since May 2005 had been due to Mr Gould’s mounting a constitutional challenge to the Board’s powers, the real fault for the delay in respect of the new contentions lay with ASIC for its delay in bringing forward its allegations in a timely manner in the first instance.
26. Allowing ASIC to rely on the new contentions would also delay the proceedings and add to the costs, as the applicant would need to present new evidence, which would also add to the stress and inconvenience suffered by Mr Gould. The Board ruled that it would be unfair to him and contrary to his reasonable expectation to be required to face fresh charges after the conclusion of the hearing when the original contentions were the result of a deliberate and conscious choice by ASIC, not of an accident or oversight or the unavailability of all the evidence.
27. This was the application of an underlying principle that had led to the concept of Anshun estoppel, as illustrated in cases such as Walter Construction Group Limited v Fair Trading Administration Corporation [2005] NSWCA 65; and Walton v Gardiner (1993) 177 CLR 378. In the former case, Tobias JA had observed that obdurate conduct by a regulatory body could undermine public confidence in the proper, fair, efficient and just administration of the relevant legislation. There were also valid analogies with the principle of double jeopardy although, strictly speaking, that did not arise in the present case because the applicant was never in jeopardy at the board hearing in relation to the new contentions.
28. The fact the applicant has sought a review of the Board’s determination should not relieve ASIC of its fundamental obligation of fairness, especially in disciplinary proceedings. The applicant is willing to subject himself to a review of the decision on the original allegations but should not have to face new allegations for the first time in 2007, which ASIC could have raised at the hearing before the Board in 2004 but had not. Raising new allegations at such a late stage was also inconsistent with the Commonwealth’s obligation to act as a model litigant: see Re Aerolink Air Services Pty Limited and Civil Aviation Safety Authority [2003] AATA 1357 at paras 5-6.
29. Quite apart from any questions of unfairness, as McHugh JA had noted in Herron, it is unpersuasive to regard a person as being unfit on the basis of such old instances, Mr Dubler said.
The jurisdiction point
30. It was not disputed that when considering an application for review of a decision, this tribunal’s role is to determine the correct or preferable decision on the material before the tribunal, not on the basis of the material available to the primary decision-maker. Nor should the tribunal review the reasons for the primary decision. It is the decision itself that is the subject of review (Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 at 589, 599).
31. Nor was it contested that the decision under review is the Board’s decision to issue a banning order as contemplated by the concluding words of s 1292(2) of the Act. The conclusions that the Board may reach as to whether it was satisfied that all or any of the grounds for the making of such an order set out in s 1292(2)(a) or (d) have been made out are steps along the way to an ultimate decision but are not reviewable decisions in themselves: Australian Broadcasting Tribunal v Bond (1990) 94 ALR 11 at 23-24 per Mason CJ. As Senior Member Taylor put it in Sleiman (at para 9), they are conditions precedent to the exercise of the decision-making power; they are not the actual discretionary exercise of the power itself.
32. Nor was it disputed that the effective exercise of the tribunal’s review power normally requires it to be free to reconsider the application of any of the criteria on which the proper exercise of the statutory power might depend, in the absence of any contrary statutory provision (Sleiman at para 9).
33. Where the parties joined issue was on the question whether there is in this instance a statutory provision to the contrary. The applicant submitted that s 1292(2) is such a provision to the contrary because the Board has the power to determine a matter only on the basis of the allegations advanced by ASIC. It could not stray beyond the charges in the application because it could act only “on an application by ASIC”. The applicant submitted that the second respondent’s position was that any ground could be considered by the tribunal if it temporally followed an application by ASIC. But that position overlooked the force of the word “on”, which was equivalent to “pursuant to”. The grounds in issue before the tribunal must have been in the application to the Board. ASIC should not be permitted to rely on new contentions that the Board had not permitted it to add to its application.
34. That argument appears to read too much into the word “on”. Confining the review before the tribunal to the grounds contained in the original application (as amended) would be a significant departure from the usual pattern of merits review under the AAT Act as analysed in Drake and succeeding cases. One would therefore expect to see some express provision so requiring, for example in s 1317B of the Act, which gives the tribunal the power to review board decisions, or in s 1292 itself. It is true, as the applicant submits, that the Act creates a two-tier structure that implicitly places the Board at arm’s length from the investigation process and the bringing of proceedings. But from that it does not follow that if an applicant seeks review of a board decision, ASIC should not be permitted to amend its contentions subject, as Taylor SM noted in Sleiman (at para 10), to the applicant having a proper opportunity to deal with the new grounds.
35. In my view the phrase “on an application by ASIC” does no more than make it clear that neither the Board of its own motion, nor any other person, can institute proceedings for a liquidator’s deregistration. That responsibility is reserved to ASIC.
36. The applicant also submitted that Sleiman should not be followed because the contrary view on the jurisdiction point did not appear to have been argued in that case. Be that as it may, Taylor SM gave express consideration to the matter and did not simply assume that jurisdiction existed. More importantly, the decision is consistent with existing authorities and the applicant did not point to any decision to the contrary. Sleiman is a recent tribunal decision on the specific jurisdictional point raised in this case and there is no good reason for not following it. I therefore conclude that the tribunal has jurisdiction to deal with the new contentions as part of the review process under the current application.
The discretionary powers point
37. In carrying out its functions, the tribunal is required by s 2A of the AAT Act to pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick. The tribunal has the discretionary power to regulate its procedure (s 33(1)). Under s 25(4A) the tribunal may determine the scope of the review of a decision by limiting the questions of fact, the evidence and the issues that it considers.
38. As the applicant’s counsel pointed out, TVW Enterprises Limited v Australian Broadcasting Tribunal (1986) 11 FCR 293 shows that tribunals are not bound to pursue every matter raised by a party. At the same time, however, the court in TVW made it clear that a tribunal must not preclude itself from considering relevant matters. That proposition is consistent with the note on s 25(4A) in the explanatory memorandum when that subsection was inserted into the AAT Act. According to the note, the provision enables the tribunal “to dismiss a party's request for the consideration of, and/or determination on, evidence or issues of law and fact which are not relevant” (Revised Explanatory Memorandum, House of Representatives, Administrative Appeals Tribunal Amendment Bill 2005).
39. I accept the principles of fairness, reasonableness and the prevention of oppression and vexation as enunciated in the cases cited by the applicant, and also that disciplinary proceedings that can have such great importance for a person’s life require particular care to be taken to avoid delay, unfairness or prejudice. In light of those principles, I respectfully agree with the Board’s decision to reject ASICs application to amend at the end of the final day of the hearing and again some weeks later after the Board had called for additional submissions.
40. The situation now before the tribunal, however, is materially different from that which the Board had to consider in 2004 and from the facts of the cases relied on by the applicant. By amending its claims in its SoFaC filed in this tribunal in the current proceedings, the respondent is seeking, not to raise new allegations at the end of a hearing, but to give notice of allegations at the outset of a new proceeding, or at least of a new stage in the proceedings. The applicant relies on the comments of Tamberlin J in Patrick v Capital Finance (Aust) Pty Limited [2003] FCA 206 at para 6, in which his Honour said:
…
It is not the function of pleadings to allow an amendment which will enable a case to be made out at the conclusion of all the evidence … so as to adjust the claims to accord with what a party has been able to make out in cross-examination, in circumstances where such an amendment would raise fresh issues that would prejudice the respondent in such a way as to render the prejudice irremediable.
…
41. In that case, however, an amendment had been sought at the end of a 12-day hearing, whereas in the present case the proceedings are in their preparatory stages.
42. Consequently, the fact that the applicant may need to present evidence additional to that on which it relied before the Board is not inherently prejudicial if the applicant is in a position to deal with the contentions. In this case the applicant has had notice of the new contentions since the respondent filed its current SoFaC on 15 March 2005.
43. The applicant particularly stressed that the fact that the Board hearing has been concluded would make any prejudice to him irreversible:
…
In particular, the way in which the original hearing was conducted cannot be undone. Matters explored in cross-examination and answers given by Mr Gould, including in his statement, were left on the basis of the case as then formulated. ASIC should not have the benefit of such answers for a different case which it could have run to begin with but it deliberately chose not to put at the time (applicant’s submissions, para 45).
…
44. The fact that the respondent would have access to the transcript of Mr Gould’s cross-examination is a factor that the applicant would need to consider in preparing his case, but does not in itself import any irremediable prejudice. If any answers given in a different earlier context could tend to mislead for that reason, the applicant will have the opportunity to qualify them or otherwise place them in the proper perspective. Further, as the Board itself noted (T 27.4, p2164), cross-examination not strictly covered by the current contentions may be relevant “because there may be matters going to credit which may be helpful to us in our determination”.
45. Similarly, the fact that the applicant might have chosen to present his case before the Board differently creates no irreparable prejudice. He will have the opportunity of preparing his case differently and may decide, for example, to cross-examine the respondent’s expert witnesses, to present expert evidence of his own or to adopt other courses that he did not follow at the Board hearing.
46. In any event, the respondent’s new contentions are not in fact completely novel. At the hearing the applicant responded to contentions 6.4, 6.5 and 6.6 (T 6, pp732-4) as well as 6.7 (T 6, p747). In his submissions to the Board, the applicant raised the distinction between paragraphs (i) and (ii) (T 24, p1791) and dealt substantively with contentions 6.5, 6.6, 2.8A, 4.5A and 6.7A, referring to the position of the three companies in external administration (T 24, p1798). He also dealt with contentions 6.7 and 8.1, and in his treatment of contentions 2.10, 4.7 and 6.4 did not distinguish between paragraphs (i) and (ii) (T 24, p1799). The respondent’s counsel drew the tribunal's attention to those passages in his submissions, and the applicant’s counsel did not contradict that submission in his detailed reply.
47. The applicant submitted that the prejudice to him would be even worse now than in 2004, when the Board disallowed the amendments, because of the time that has elapsed since. Some of the allegations relate to matters that are now nine years in the past. He conceded, however, that the delay since May 2005 is the result of his own decision to pursue an ultimately unsuccessful constitutional challenge to the Board’s powers. While the lapse of time will inevitably create some difficulties for the applicant, triers of fact are well aware of such problems, which can properly be made the subject of comment in the applicant’s submissions. At all events, a time interval of nine years is not an extraordinary one. It is not unknown for criminal trials to relate to offences allegedly committed 30 years earlier, and World War II war crimes prosecutions are still being pressed over 60 years after the events to which they relate.
48. The applicant sought support in Black J’s observation in Green v United States (1957) 355 US 184 at 187-188 that:
…the State with all its resources and power should not be allowed to make repeated attempts to convict an individual for an alleged offence, thereby subjecting him to embarrassment, expense and ordeal and compelling him to live in a continuing state of anxiety and insecurity, as well as enhancing the possibility that even though innocent he may be found guilty.
…
49. Kirby P had cited that passage with approval in Gill v Walton (1991) 25 NSWLR 190 at 207.
50. While the respondent’s original formulation of its contentions may have been a matter of conscious choice, this is not a case of the government making repeated attempts to convict a person as in Green. It was the applicant who instituted the current proceedings. The applicant did not refer to any case in which a government agency had been precluded from altering its contentions in a review proceeding instituted by the party charged. Thus Walton, on which the applicant strongly relied, involved the bringing of fresh disciplinary proceedings against medical practitioners who had received the benefit of a stay. The applicant may well face some strain and anxiety as a result of commencing the current application, but that in itself does not make the proceedings oppressive or an abuse of process.
51. The applicant also referred to the Commonwealth’s commitment to act as a model litigant, as was noted by Senior Member Allen in Aerolink at para 7. In that case the tribunal made it clear, however, that grounds other than, or additional to, those relied on when the decision under review was made can be raised by a respondent, provided that notice is given to the applicant well in advance of the hearing, as has happened here. The tribunal in Aerolink also allowed an allegation to be raised even without advance notice, in circumstances where the applicant was in a position to deal with it because it arose out of evidence given in another matter before the tribunal (at paras 4, 6). Similarly, in Sleiman, the tribunal considered that additional grounds could be raised in an amended SoFaC provided that the applicant had a proper opportunity to deal with them (at para 10).
52. The new contentions were not dealt with substantively by the Board, which rejected them because they had been raised so late as to cause irremediable prejudice to the applicant.
53. The observations of the Full Court of the Federal Court in National Australia Bank Limited v Nobile & Anor (1988) 100 ALR 227, at 235-236, help to put the present application in perspective:
…
It was a ground of appeal that the issue as to the misrepresentation was raised at a late stage in the hearing of the proceeding and that an amendment to the pleadings to rely upon it was permitted at the close of the evidence. In my opinion, the amendment was properly allowed. The factual evidence had already been given by all relevant witnesses who, on that point, were in substantial agreement. It would have been unjust to exclude reliance upon it. Pleadings are intended to enhance the achievement of justice, not to hinder it. Unless good reason appears to the contrary, an amendment should be made to raise the real issues between the parties: see, for example, Cropper v Smith (1884) 26 Ch D 700 at 710-11 per Bowen LJ.
As Muirhead J said in Caruso Australia Pty Ltd v Portec Australia Pty Ltd (Federal Court, G29/1983, 13 February 1986, unreported):
The powers of this court to amend pursuant to O 13, r 2 are more than wide, they tend to be remedial in that ‘all necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, or of correcting any defect or error in any proceeding, or of avoiding multiplicity of proceedings’. Consideration of the authorities indicates that an amendment should only be refused where bad faith is demonstrated or where the consequential injury or prejudice to the other party is incapable of remedy. And this reasoning applies to amendments sought during trial or on the eve of trial.
…
54. I therefore conclude that the respondent should not be precluded from relying on the new contentions contained in its SoFaC dated 15 March 2005. The applicant’s interlocutory application is dismissed.
I certify that the 54 preceding paragraphs are a true copy of the reasons for the decision herein of Professor GD Walker, Deputy President
Signed: .............................[sgd]........................................
R. Wallace, AssociateDate/s of Hearing: 19 September 2007
Date of Decision: 2 November 2007
Solicitor for the Applicant: Mr Eric Herman, Henry Davis York
Counsel for the Applicant: Mr Robert Dubler SC
Counsel for the First Respondent: No appearance
Solicitor for the Second Respondent: Mr George Boland, ASIC
Counsel for the Second Respondent: Mr GP McNally
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