Gould v Companies Auditors and Liquidators Disciplinary Board - [2009] FCA 475

FEDERAL COURT OF AUSTRALIA
Gould v Companies Auditors and Liquidators Disciplinary Board
[2009] FCA 475
ADMINISTRATIVE LAW – appeal from Administrative Appeals Tribunal (AAT) on questions of law and application under s 39B of Judiciary Act 1903 (Cth) for relief in respect of AAT’s decision – AAT affirmed decision Companies Auditors and Liquidators Disciplinary Board (Board) suspending registration of applicant (G) as a liquidator for three months – Board had found that G had failed to carry out “adequately and properly” duties as liquidator and as administrator of certain companies, so that the power given by s 1292(2)(d) of Corporations Law (Law) and of Corporations Act 2001 (Cth) (Act) was enlivened – proceeding before Board and later before AAT had proceeded on Contentions as formulated by Australia Securities and Investments Commission (ASIC) – each of Board and AAT found some Contentions established and others not established –
(1) whether G had failed to satisfy a “professional standard” by failing to include a “cap” or “upper limit” in his remuneration submitted to creditors for approval at time of his appointment – status of guidance and statement of best practice issued by Insolvency Practitioners Association of Australia (IPAA) – whether those documents, standing alone and unsupported by expert evidence, established a professional standard in relevant sense –
(2) whether contravention of s 450E(2) established by G’s writing on his Chartered Accountant’s letterhead to creditors informing them of progress of administration under deed of company arrangement (DOCA) – letters referred to company “in administration” rather than “subject to deed of company arrangement” – whether the letters were “business letters” for purposes of s 88A(1)(c) of Law (and of Act) – whether letters were signed or issued by or on behalf of companies subject to DOCA –
(3) whether G was entitled to charge as an expense of liquidation a late fee that he had been charged by ASIC for lodging documents later than the last day of period allowed for lodgement – liquidator’s lien – effect of fact that G was owed thousands of dollars for remuneration that would never be paid –
(4) whether G had contravened s 539(1) of Law (and of Act) by including a wrong monetary amount in his Forms 524 (six-monthly accounts) – Forms 524 showed amount available for unsecured creditors as $1,246,306 (which was also shown as the amount owing to them) rather than “Nil” – difference between a statement that is “misleading” and one that is “false” – whether failure to supervise staff properly and adequately established –
(5) whether AAT should have entertained certain amended Contentions where ASIC had been refused leave to amend them by Board – double jeopardy – nature of hearing before AAT –
(6) nature of requirement that registered liquidator consent in writing to be appointed as administrator before being appointed or acting as administrator – whether resolution can have a latent or contingent operation to be enlivened once the registered liquidator gives the consent in writing.
CORPORATIONS – appeal from Administrative Appeals Tribunal (AAT) on questions of law and application under s 39B of Judiciary Act 1903 (Cth) for relief in respect of AAT’s decision – AAT affirmed decision Companies Auditors and Liquidators Disciplinary Board (Board) suspending registration of applicant (G) as a liquidator for three months – Board had found that G had failed to carry out “adequately and properly” duties as liquidator and as administrator of certain companies, so that the power given by s 1292(2)(d) of Corporations Law (Law) and of Corporations Act 2001 (Cth) (Act) was enlivened – proceeding before Board and later before AAT had proceeded on Contentions as formulated by Australia Securities and Investments Commission (ASIC) – each of Board and AAT found some Contentions established and others not established –
(1) whether G had failed to satisfy a “professional standard” by failing to include a “cap” or “upper limit” in his remuneration submitted to creditors for approval at time of his appointment – status of guidance and statement of best practice issued by Insolvency Practitioners Association of Australia (IPAA) – whether those documents, standing alone and unsupported by expert evidence, established a professional standard in relevant sense –
(2) whether contravention of s 450E(2) established by G’s writing on his Chartered Accountant’s letterhead to creditors informing them of progress of administration under deed of company arrangement (DOCA) – letters referred to company “in administration” rather than “subject to deed of company arrangement” – whether the letters were “business letters” for purposes of s 88A(1)(c) of Law (and of Act) – whether letters were signed or issued by or on behalf of companies subject to DOCA –
(3) whether G was entitled to charge as an expense of liquidation a late fee that he had been charged by ASIC for lodging documents later than the last day of period allowed for lodgement – liquidator’s lien – effect of fact that G was owed thousands of dollars for remuneration that would never be paid –
(4) whether G had contravened s 539(1) of Law (and of Act) by including a wrong monetary amount in his Forms 524 (six-monthly accounts) – Forms 524 showed amount available for unsecured creditors as $1,246,306 (which was also shown as the amount owing to them) rather than “Nil” – difference between a statement that is “misleading” and one that is “false” – whether failure to supervise staff properly and adequately established –
(5) whether AAT should have entertained certain amended Contentions where ASIC had been refused leave to amend them by Board – double jeopardy – nature of hearing before AAT –
(6) nature of requirement that registered liquidator consent in writing to be appointed as administrator before being appointed or acting as administrator – whether resolution can have a latent or contingent operation to be enlivened once the registered liquidator gives the consent in writing.
Corporations Law ss 88A, 449E, 450E, 1292, 1308
Corporations Act 2001 (Cth) ss 88A, 449E, 450E, 1292, 1308
Adler v Australian Securities and Investments Commission (2003) 46 ACSR 504 cited
Adsett v Berlouis (1992) 37 FCR 201 discussed
Ah Toy v Registrar of Companies (1986) 10 FCR 356 discussed
Albarran v Companies Auditors and Liquidators Disciplinary Board (2007) 231 CLR 350 cited
Anderson and Companies Auditors and Liquidators Disciplinary Board [2007] AATA 1540 discussed
Ascot Investment and Management v Livestock Genetics (1999) 205 LSJS 247 discussed
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 distinguished
Dean-Willcocks v Companies Auditors and Liquidators Disciplinary Board (2006) 59 ACSR 698; [2006] FCA 1438 followed
Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 followed
Goodman v Australian Securities and Investments Commission (2004) 50 ACSR 1 cited
Greek Herald Pty Ltd v Nikolopoulos (2001) 54 NSWLR 165 cited
Green v United States 355 US 184 (1957) distinguished
John L Pty Ltd v Attorney-General (NSW) (1987) 163 CLR 508 cited
Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 cited
National Education Advancement Programs (NEAP) Pty Ltd v Ashton (1995) 33 IPR 281 discussed
Parkdale Custom Built Furniture Pty Limited v Puxu Pty Limited (1982) 149 CLR 191 cited
Shi v Migration Agents Registration Authority (2008) 235 CLR 286 cited
Sleiman and Australian Securities and Investments Commission [2007] AATA 1383 followed
Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Incorporated (1992) 38 FCR 1 cited
Vines v Australian Securities and Investments Commission (2007) 62 ACSR 1 cited
Vouris; Epromotions Australia Pty Ltd and Relectronic-Remech Pty Ltd (in liq) (2003) 47 ACSR 155 cited
Wharton and Australian Securities and Investments Commission (2002) 69 ALD 419 cited
VANDA RUSSELL GOULD v COMPANIES AUDITORS AND LIQUIDATORS DISCIPLINARY BOARD and AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
NSD 1590 of 2008
VANDA RUSSELL GOULD v ADMINISTRATIVE APPEALS TRIBUNAL and AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION and COMPANIES AUDITORS AND LIQUIDATORS DISCIPLINARY BOARD
NSD 1778 of 2008
LINDGREN J
12 MAY 2009
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 1590 of 2008

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN:
VANDA RUSSELL GOULD
Applicant

AND:
COMPANIES AUDITORS AND LIQUIDATORS DISCIPLINARY BOARD
First Respondent

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Second Respondent

JUDGE:

LINDGREN J

DATE OF ORDER:

12 MAY 2009

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The proceeding be stood over to Wednesday 20 May 2009 at 9.30 am for directions.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 1778 of 2008

BETWEEN:
VANDA RUSSELL GOULD
Applicant

AND:
ADMINISTRATIVE APPEALS TRIBUNAL
First Respondent

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Second Respondent

COMPANIES AUDITORS AND LIQUIDATORS DISCIPLINARY BOARD
Third Respondent

JUDGE:

LINDGREN J

DATE:

12 MAY 2009

PLACE:

SYDNEY

THE COURT ORDERS THAT:
1.The proceeding be stood over to Wednesday 20 May 2009 at 9.30 am for directions.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY

NSD 1590 of 2008

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN:
VANDA RUSSELL GOULD
Applicant

AND:
COMPANIES AUDITORS AND LIQUIDATORS DISCIPLINARY BOARD
First Respondent

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Second Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 1778 of 2008

BETWEEN:
VANDA RUSSELL GOULD
Applicant

AND:
ADMINISTRATIVE APPEALS TRIBUNAL
First Respondent

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Second Respondent

COMPANIES AUDITORS AND LIQUIDATORS DISCIPLINARY BOARD
Third Respondent

JUDGE:

LINDGREN J

DATE:

12 MAY 2009

PLACE:

SYDNEY

TABLE OF CONTENTS

Para

Introduction
[1]

Reasons for Decision of the AAT
[26]

The Three Companies [28]

Consideration

A.       Failure to cap remuneration – Questions associated with
           Contentions 2.6, 4.4 and 6.3

B.        Non-compliance with s 450E(2) by failure to state “(subject
           to deed of company arrangement)” – Questions associated
           with Contentions 2.9 and 4.6

C.       Payment of two late lodgement fees from Popwing’s assets as
           expenses of the liquidation – Questions associated with
           Contention 6.5

D.       Contravention of s 1308(4) of the Law in respect of Forms 524 – Question associated with Contentions 6.6 and 6.7A

E.        Whether the AAT had jurisdiction to entertain Contentions 2.1,
6.5, 6.6 and 6.7A or was otherwise not at liberty to entertain them

F.        ASIC’S Notice of Contention relating to Contentions 2.1,
           2.11, 6.6 and 6.7A

[41]

[126]

[160]

[213]

[259]

[315]

Conclusion
[372]

REASONS FOR JUDGMENT
INTRODUCTION

The applicant in these two proceedings, Vanda Russell Gould (Mr Gould), was registered as a liquidator on 7 January 1983 pursuant to s 20 of the Companies (New South Wales) Code (the Code). The Code reproduced the Companies Act 1981 (Cth).
On and from 1 January 1991, the Australian Securities Commission was taken to have registered Mr Gould as a liquidator under the Corporations Law 1989 (the Law): see s 1278 of the Law. Later Mr Gould became registered as a liquidator under s 1280 of the Corporations Act 2001 (Cth) (the Act).
On 26 August 2004, on the application of the Australian Securities and Investments Commission (ASIC), the Companies Auditors and Liquidators Disciplinary Board (CALDB or the Board) determined that Mr Gould had failed to carry out or perform adequately and properly the duties of a liquidator, and the duties or functions required by an Australian law to be carried out or performed by a registered liquidator.
This determination by the Board reflected certain terms of s 1292(2) of the Act, which provided, relevantly, as follows:
The Board may, if it is satisfied on an application by ASIC for a person who is registered as a liquidator to be dealt with under this section that, before, at or after the commencement of this section:
…
(d) that the person has failed … to carry out or perform adequately and properly:
(i) the duties of a liquidator; or
(ii)any duties or functions required by an Australian law to be carried out or performed by a registered liquidator;
or is otherwise not a fit and proper person to remain registered as a liquidator;
by order, cancel, or suspend for a specified period, the registration of the person as a liquidator.
Paragraph (d)(i) refers to the duties of the office of liquidator occupied by the person. Paragraph (d)(ii) refers to the duties or functions of other offices that, under Australian law, may only be carried out or performed by a registered liquidator. The offices of the latter class that are of present relevance are those of an administrator and of an administrator of a deed of company arrangement (DOCA), in each case under Pt 5.3A of the Law (or of the Act).
Only a registered liquidator may consent to be appointed, and act, as:
·liquidator of a company (s 532(1) of the Act);
·administrator of a company under Pt 5.3A of the Act (s 448B of the Act);
·administrator of a deed of company arrangement under Pt 5.3A of the Act (s 448B of the Act).
The comparable provisions in the Law were found in sections bearing the same numbers.
The Act commenced on 15 July 2001. All or nearly all of the conduct of Mr Gould that is in question preceded that date. It is therefore the provisions of the Law that are relevant. Nothing turns on this, however, because there is no material difference between the relevant provisions of the Law and those of the Act.
The Board deferred consideration of the orders to be made consequential upon its determination. After hearing submissions, the Board ordered on 21 December 2004 that:
(a)Mr Gould’s registration as a liquidator be suspended for a period of three months from the date which was 30 days after the order took effect;
(b)Mr Gould be required to give an undertaking that before accepting any appointment after the period of suspension, he would provide to ASIC a certificate by a registered liquidator (approved in advance by ASIC for the purpose) that his internal systems and procedures for conducting insolvency administrations were of an acceptable standard; and
(c)Mr Gould pay one half of ASIC’s costs in relation to the hearing on a party and party basis (including one quarter of the costs of ASIC’s expert’s report), the costs to be as agreed between the parties or, failing agreement within 60 days after the order took effect, to be determined in accordance with the Board’s Practice Note on costs.
The Board’s determination related to Mr Gould’s conduct as administrator of, relevantly, Trinbay Pty Limited (subject to deed of company arrangement) (Trinbay) and Sisterella Pty Limited (subject to deed of company arrangement) (Sisterella), and as liquidator of, relevantly, Popwing Pty Limited (in liquidation) (Popwing). As is evident, each of Trinbay and Sisterella was the subject of a DOCA, while Popwing was the subject of a creditors’ winding up. (The Board’s determination also related to Cresvale Securities Limited and Marble Engineering Products Pty Ltd, which are not presently relevant.)
The proceeding before the Board, and the Board’s reasons for its determination, were structured by reference to “Contentions” that appeared in a statement of facts and contentions of ASIC. In its determination of 26 August 2004, the Board designated the various contentions as “Not established”, “Withdrawn”, “Established” or “Not accepted”.
On 22 December 2004, the day immediately following the date of the Board’s orders, Mr Gould applied to the Administrative Appeals Tribunal (AAT or the Tribunal) for review of the Board’s decision.
The parties informed me that the Tribunal stayed the operation of the suspension order upon Mr Gould’s giving certain undertakings to the Tribunal, and that the stay is still in place pending the determination of these proceedings.
Before the AAT, ASIC again filed a statement of facts and contentions (SOFAC). It was dated and filed on 15 March 2005 and had numerous annexures (in quoting from the SOFAC in these reasons, I will omit reference to the annexures). Mr Gould filed a responsive statement of facts and contentions dated 19 February 2008. In its SOFAC, ASIC continued to use the numbering that it had used in its statement of facts and contentions before the Board.
The argument before the AAT took place by reference to the numbered Contentions in the SOFAC. For example, there was a contention that Mr Gould had failed to “cap” his remuneration in accordance with guidelines of the Insolvency Practitioners Association of Australia (IPAA) which found expression in Contentions 2.6 in respect of Trinbay, 4.4 in respect of Sisterella, and 6.3 in respect of Popwing.
On 12 September 2008, the Tribunal:
·dismissed Contentions 2.1, 2.10, 2.11, 4.3, 4.5A, 4.7, 6.4, 6.6, 6.7, 6.7A and 8;
·found Contentions 2.6, 2.9, 4.4, 4.6, 6.3 and 6.5 established;
·affirmed the decision under review; and
·adjourned the question of the appropriate orders to be made.
On 10 October 2008 Mr Gould filed a Notice of Appeal in this Court (NSD 1590 of 2008), purporting to appeal from the Tribunal’s decision on questions of law pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) (the Appeal Proceeding).
By the time of the hearing, Mr Gould’s appeal document was a Further Amended Supplementary Notice of Appeal (FASNA) that was filed in Court on 11 December 2008. The FASNA raised 28 purported questions of law which were grouped by reference to the Contentions to which they related. The FASNA also set out Mr Gould’s “Grounds” and seven findings of fact that he asked the Court to make. On the hearing, however, counsel for Mr Gould said that his client pressed only for the first of those findings.
ASIC filed a Notice of Contention challenging the Tribunal’s dismissals of its Contentions 2.1, 2.11, 6.6 and 6.7A. The Notice of Contention purported to raise questions of law, and, like the FASNA, associated them with particular Contentions in the SOFAC.
On 13 November 2008 Mr Gould commenced a separate proceeding in the Court (NSD 1778 of 2008) applying for an order of review and relief in respect of the Tribunal’s decision under s 39B of the Judiciary Act 1903 (Cth) (Judiciary Act) (the Review Proceeding). By consent, I made an order extending the time for the filing of that application to that date.
By the time of the hearing, the application in the Review Proceeding was expressed in an amended application that was filed on 10 December 2008.
The grounds of review relied on in the amended application were also grouped by reference to the Contentions which were the focus of the purported questions of law raised in the FASNA.
In both the Appeal Proceeding and the Review Proceeding, the only active respondent was ASIC. The other respondents submitted to such order as the Court might make, save as to costs.

It was explained to me that the purpose of the Review Proceeding was to overcome any problem that might arise if I were to take the view that a purported question of law stated in the FASNA was not a question of law on which the Appeal Proceeding was brought, within the meaning and for the purposes of s 44 of the AAT Act.
ASIC did not submit that any of the 28 purported questions of law raised in the FASNA were not truly questions of law on which the Appeal Proceeding was brought. ASIC also did not submit that the Court lacked jurisdiction to entertain the application for relief under s 39B of the Judiciary Act. However, Mr Gould complained that certain purported questions raised in the Notice of Contention were not questions of law.
The existence of questions of law goes to the Court’s jurisdiction. It will be necessary to return to this issue and the question whether the Review Proceeding overcomes any difficulty in this respect. I have decided to indicate my proposed answers to the questions posed, but not to record my answers to them until the parties had the opportunity to read these reasons and to make submissions on the issues to which I have just referred (see [372] ff below).
Before this Court, counsel structured their submissions around grouped Contentions and the associated questions of law, and I will structure my reasons similarly under “CONSIDERATION” below.
REASONS FOR DECISION OF THE AAT
In its reasons for decision (Re Gould and Companies Auditors and Liquidators Disciplinary Board (2008) 106 ALD 53; [2008] AATA 814), the AAT quoted at length from the SOFAC filed by ASIC. I will describe the relevant Contentions in the SOFAC and the AAT’s reasons in relation to them under “CONSIDERATION” below.
The Contentions fall into the following categories:
·those that the AAT found to be established and that Mr Gould submits on substantive grounds it should not have found established (Contentions 2.6, 2.9, 4.4, 4.6, 6.3, 6.5);
·those that Mr Gould submits the AAT had no jurisdiction to entertain or ought not to have entertained (Contentions 2.1, 6.5, 6.6 and 6.7A);
·those that the AAT dismissed and that ASIC contends in its Notice of Contention the AAT should have found established (Contention 2.11 and, again, Contentions 2.1, 6.6 and 6.7A).
THE THREE COMPANIES
It is convenient to note now certain facts relating to Trinbay, Sisterella and Popwing.
Trinbay
As at September 2000 Trinbay had three directors. On 11 August 2000 two of them signed a “circular resolution” appointing Mr Gould as administrator of the company under Pt 5.3A of the Law. The third director signed the resolution on 11 September 2000.
On 3 October 2000 Mr Gould provided a written consent to act as administrator of Trinbay: see s 448A of the Law, and on 4 October 2000 he lodged with ASIC a Form 505 signed by him stating that he had been appointed.
On 31 October 2000, at the second meeting of Trinbay’s creditors, it was resolved that the company execute a DOCA and a resolution was passed relating to Mr Gould’s remuneration. I will discuss the Trinbay remuneration resolution in Part A below.
On 20 November 2000 the DOCA was executed by Trinbay and Mr Gould. By cl 3.1 of the DOCA Mr Gould was appointed, and agreed to act, as administrator of the DOCA. Clause 4 provided for Mr Gould’s remuneration as administrator of the DOCA.
It will be noted that all of the events recounted above preceded the commencement of the Act on 15 July 2001, and occurred at a time when the Law was in force.
Sisterella
As at September 1998 Sisterella had two directors.
Mr Gould was appointed as administrator of Sisterella on 11 August 1998.
The second meeting of Sisterella’s creditors was held on 4 September 1998 when the creditors resolved that the company should execute a DOCA, and passed a resolution relating to Mr Gould’s remuneration as administrator. I will discuss the Sisterella remuneration resolution in Part A below.
On 25 September 1998 Sisterella and Mr Gould executed a DOCA. Clause 3.1 of the DOCA provided that Mr Gould was appointed, and agreed to act, as administrator of the DOCA. Clause 4 of the DOCA provided for his remuneration as administrator of the DOCA.
It will be noted that all of the events recounted above preceded the commencement of the Act on 15 July 2001, and occurred at a time when the Law was in force.
Popwing
On 4 November 1998, the creditors of Popwing passed resolutions:
·for the voluntary winding up of the company;
·appointing Mr Gould as liquidator; and
·relating to Mr Gould’s remuneration as liquidator
I will discuss the Popwing remuneration resolution in Part A below.
It will be noted that all of the events recounted above preceded the commencement of the Act on 15 July 2001 and occurred when the Law was in force.
CONSIDERATION
A. Failure to cap remuneration – Questions associated with Contentions 2.6, 4.4 and 6.3
The Contentions
As noted earlier, Contention 2.6 related to Trinbay, 4.4 to Sisterella, and 6.3 to Popwing.
Contentions 2.6 and 4.4 were that Mr Gould “failed to cap his remuneration as administrator in accordance with IPAA Guidelines”. Contention 6.3 was also that Mr Gould “failed to cap his remuneration as liquidator in accordance with IPAA Guidelines”. In the cases of Sisterella and Popwing, ASIC relied on the Capping provision in the IPAA Guide published by the IPAA in 1997 (the Guide). In the case of Trinbay, however, ASIC relied on the Capping provision of the IPAA’s Statement of Best Practice – Remuneration: 1 July 2000 that had effect from 1 July 2000 (the Statement). The terms of the two Capping provisions are set out below.
Associated Questions raised in the FASNA
The following questions were stated in the FASNA in connection with Contentions 2.6, 4.4 and 6.3:
Question 1: Whether the true legal effect of the resolutions in issue was merely to set the basis or hourly rates of the applicant’s fees and that they did not determine or approve or fix the amount (or any amount) of his fees?
Question 2: Whether the true legal effect or construction of the IPAA Guidelines in question, was that no upper limit or cap was required to be included in the resolutions in issue?
Question 3: Whether the Tribunal acting reasonably, judicially and properly instructed as to the law was required to find that the resolutions in issue were not intended by the applicant to determine the amount of his fee?
Question 4: Whether the Tribunal, contrary to law, denied the applicant procedural fairness by finding that the resolutions in question were intended by the applicant to determine the amount of his fee?
Question 4A: Whether the Tribunal erred in failing to provide reasons for rejecting the Applicant’s evidence that the resolutions were only or merely intended to approve the basis of his fees not any actual remuneration or, alternatively, erred in failing to have regard to the applicant’s evidence to this effect?
Question 5: Whether the Tribunal misapplied the onus of proof or otherwise acted contrary to law in drawing an adverse inference from the absence of evidence of the applicant seeking approval of a fee amount later?
Question 6: Whether the Tribunal erred in law in taking into account an irrelevant consideration, being the absence of evidence of the applicant seeking approval of the fee amount later and the personal state of mind of the applicant towards the resolutions in question?
Question 7: Whether the true legal effect of the IPAA Guidelines in question was not to set a mandatory professional standard and, therefore, they could not be a “duty” or “function” within the meaning of 1292(2)(d)(i) and (ii) of the Corporations Act?
Question 8: Whether the Tribunal acting reasonably, judicially and properly instructed as to the law was required to dismiss Contentions 2.6, 4.4 and 6.3?
General
Sisterella’s creditors resolved on 4 September 1998 as follows:
… that the remuneration of the Administrator be approved on a time basis that the Administrator and his staff spend in performing services in the administration calculated at the published rates of the Insolvency Practitioners Association of Australia (a schedule of the current rates having been annexed to the Notice of Meeting).
Popwing’s creditors resolved on 4 November 1998 as follows:
… that the remuneration of the liquidator is hereby fixed in respect of himself, his partners and employees at the hourly rate applicable to the grades or classification set out in the scale of fees issued by the Insolvency Practitioners Association of Australia from time to time.
The members of Popwing had resolved earlier on the same day that Mr Gould’s costs of assisting in the convening of the meeting of members and the remuneration of the liquidator, his partners and staff, be fixed on a time basis at rates within the scale of charges recommended by the IPAA from time to time. The creditors’ resolution related to the remuneration of the liquidator as liquidator generally. It is only the creditors’ remuneration resolution of which ASIC complained and with which I am concerned.
Trinbay’s creditors resolved on 31 October 2000 “that the remuneration of the Administrator be calculated at the [IPAA] rates”.
In none of the three resolutions was there a statement of a cap or upper limit.
Contention 6.3 (Popwing) attracted para (i) of s 1292(2)(d), whereas Contentions 2.6 (Trinbay) and Contention 4.4 (Sisterella) attracted para (ii) of s 1292(2)(d) (see [4] above).
The Law did not specify that a cap was required. In Dean-Willcocks v Companies Auditors and Liquidators Disciplinary Board & Anor (2006) 59 ACSR 698; [2006] FCA 1438 (Dean-Willcocks), however, Tamberlin J accepted that in determining whether a registered liquidator has failed to carry out or perform “adequately and properly” any duties or functions required by Australian law to be carried out or performed by a registered liquidator for the purposes of s 1292(2)(d)(ii), it was permissible to test performance of the registered liquidator in the office of administrator against professional standards and codes (at [21]-[34]). Moreover, his Honour held that the concept of the performance of the function of an administrator was wide enough to include the acceptance of appointment to that office (at [32]). Tamberlin J’s views must apply a fortiori to s 1292(2)(d)(i) and the office of a liquidator – a fortiori because an argument, based on the presence of the words “required by an Australian law to be carried out or performed by a registered liquidator” in para (ii) of s 1292(2)(d), that subsection (2) refers only to legislative prescriptions (an argument rejected by his Honour) is not available in respect of para (i).
ASIC’s proposition was that by not including a cap or upper limit, Mr Gould had fallen short of a professional standard which was stated in the Capping provisions of the Guide and the Statement. Before the Tribunal ASIC relied on the tender of those documents unsupported by any expert testimony.
The Guide and the Statement of the IPAA
On 20 December 1997 the IPAA issued the Guide, called a “Guide to Hourly Rates”, to have effect from 1 December 1997. The Guide included certain Classifications by reference to insolvency experience and Hourly Rates chargeable in respect of persons falling within the various classes.
The ‘Guidelines’ section of the Guide, which took the form of a covering letter to IPAA’s members, stated that the Guide consisted of four documents, namely, Guidelines, Explanatory Notes, Rates and Classifications, and that the four should not be read or used in isolation from one another. The Guidelines also stressed that creditors and courts were the final arbiters on the quantum of fees charged by a member, and that the Guide must not be taken by practitioners as an indication of the rates to be used in every instance.
The Explanatory Notes observed that the IPAA had first issued a recommended scale in July 1982 which had been revised in 1991. They stated:
It is often necessary or desirable to set out a Guide to Hourly Rates in a document of appointment, a resolution of creditors, or in a formal application to a court.
The Explanatory Notes encouraged practitioners to develop rates reflecting their own cost structures, and explained that the Guide was not intended to fix rates for all administrations.
Importantly, the Explanatory Notes stated:
Capping
The resolution for remuneration should include a specified amount and where remuneration is approved prospectively an upper limit must be included in the resolution of creditors or Committee of Inspection. If an amount is not specified or the amount specified is exceeded, it will be necessary for Practitioners to convene a further meeting in order to seek approval for a specified amount or for the additional amount. [My emphasis]
This was the Capping provision applicable in the cases of Sisterella and Popwing.
On 18 June 1999 the IPAA wrote to its members enclosing an updated “Guide to Fees” to have effect from 1 July 1999. This document was not in the Appeal Book and there is a suggestion that it did not alter the Hourly Rates (see [62] below). The IPAA’s letter stated that the Guide continued to consist of the same four documents or sections, and again cautioned against using the Guide in every instance.
The year 2000 saw a change in the IPAA’s policy. On 31 March 2000 the IPAA distributed to its members a document headed “Best Practice Remuneration Charging – Moving Away From the Scale Guide to Hourly Rates” (Best Practice document), which had been prepared by an IPAA Working Party on Fees for and on behalf of the IPAA National Committee. This Best Practice document stated that it was no longer appropriate for the IPAA to publish the Guide, and that from 1 July 2000 the Guide would be replaced by a Statement of Best Practice, although the Guide might continue to apply for transitional purposes (p 3). The Best Practice document referred to competition law and other considerations that had led to the abandonment of the IPAA’s scales of hourly rates.
At p 7 the Best Practice document stated:
Rather than attempt to define an exhaustive list of best practices that might apply to remuneration charging, it would seem more appropriate to adopt a skeletal approach at the outset where fundamental principles are determined (the skeleton), and thereafter standards are progressively developed to provide for how these principles are to be applied (meat to the bones).
At p 8, the Best Practice document stated that the initial report to creditors should include information as to the basis on and method by which an administrator seeks to be remunerated “and where appropriate an estimate of the expected level of the Administrator’s remuneration” (my emphasis). This statement acknowledged that there would or might be circumstances in which it would not be appropriate to include an estimate of the expected level of remuneration.
The Best Practice document stated (p 8) that where the administrator seeks to be remunerated by an hourly rate, he or she “is to ensure that creditors are informed as to the amount per hour sought by the Administrator for his/her services and those of the Administrator’s staff”.
The Best Practice document stated (p 9) that where remuneration was to be calculated by reference to a scale of hourly rates, the administrator should ensure that a copy of the scale was sent to creditors prior to any meeting at which the question of remuneration was to be considered by them.
Importantly, the Best Practice document contained the following statement (p 9):
Where the Administrator is to be remunerated on the basis of an hourly rate the resolution for remuneration should include a specified amount and where remuneration is approved prospectively an upper limit must be included in a resolution of creditors or Committee of Inspection. [Emphasis in original]
The similarity between this statement and the Capping provision of the Guide of 1997 set out at [54] above will be noted.
Observing that the Guide’s Hourly Rates would not be adjusted in the future and that they had not been changed since 1 December 1997, the Best Practice document remarked that they would cease to be realistic or competitive in the future.
The Best Practice document concluded (p 13):
A Best Practice Guide will be produced to take effect from 1 July 2000 incorporating all the existing principles set out in the current IPAA Guidelines and Explanatory Notes but no Scale of Rates or Staff Classifications.
As foreshadowed, the IPAA issued the Statement which was intended to cover “the transition” from the pre-1 July 2000 IPAA Guide to Hourly Rates Scale and Staff Classifications, and the post-1 July 2000 period. The Statement characterised the change as being from the IPAA scale to hourly rates determined in accordance with a firm’s own internal cost structures having regard to the complexity and demands of each appointment.
In a section entitled “Key Definitions”, the Statement defined “Capping” to mean:
[A] broad estimate for each phase of work that creditors may rely upon having approved the phase and cost.
Accordingly, the Statement specified something that the Guide had not specified: that the concept of a cap was not simply an arbitrary ceiling to be selected by the registered liquidator, but an estimate of an amount on which creditors could rely.
The Statement said (p 2) that in most cases it is necessary to set out the basis of fees and hourly rates in a document of appointment, a resolution of creditors, or a formal application to a court. The Statement contained the IPAA’s recommendation that in most insolvency appointments, the fixing of fees be upon the basis of time spent at the level appropriate to the work performed.
The Capping provision of the Statement was as follows (p 3):
Capping
The resolution for approval of remuneration under both the Corporations Law and Bankruptcy Act should show the basis and include a specified amount. Where remuneration is approved prospectively, an upper limit must be included in the resolution of Creditors or Committee of Inspection.
If an amount is not specified or the amount specified is exceeded, it will be necessary to seek approval for a specified amount or for the additional amount, not dissimilar to the Letters of Engagement and Understanding for any other professional appointment. [My emphasis]
It will be recalled that according to the conclusion in the Best Practice document (see [64] above), this Capping provision was intended to reflect the capping “principle” of the Guide. Unlike the Statement, however, the Guide had not included an explicit definition of “Capping” or a requirement that the “basis” of the remuneration be shown. It will be noted that the word “Capping” is not used in the text of the Statement’s Capping provision, although it is the heading to that provision. There is therefore a question whether the “upper limit” referred to in the text is the same thing as the definition of capping, namely a broad estimate of the cost of a phase that could be relied on by creditors, or whether an arbitrary ceiling was permitted.
The Statement recognised (p 3) that in case of pre-1 July 2000 appointments, remuneration might have been agreed based on the former IPAA Scale, and that such an agreement should continue unless varied in the normal course of the administration.
The Statement concluded (p 4):
The above sets out the principles underlying Best Practices – Remuneration. Given the uniqueness of each Appointment, the IPAA has no desire to introduce practices that are purely mechanical or prescriptive. [My emphasis]
Mr Gould’s appointment as administrator of Trinbay occurred after 1 July 2000. In the case of Trinbay, therefore, ASIC relied on the Capping provision of the Statement.
On 14 December 2007, the IPAA (now called the IPA) approved a new Code of Professional Practice which contained provisions relating to remuneration but these are not of present relevance.
The proceeding before the Tribunal relating to failure to cap

The proper construction of the IPAA documents and the characterisation of the three remuneration resolutions were matters of dispute before the Tribunal.
Before the Tribunal Mr Gould adopted written statements that he had made dated 6 February 2008 and 6 March 2008. The statement dated 6 February 2008 contained the following:
38.At the time, it was widely accepted amongst competent fellow professionals that the IPAA guidelines were just that – guidelines. The extent to which they could or should be followed would all depend upon the actual circumstances of the case in question.
39.I was not aware at the time of anyone in the profession stating that the IPAA guidelines were mandatory in every case and that a failure to follow strictly the IPAA guidelines in every case would amount to a failure to perform adequately and properly the duties of a liquidator or administrator. My approach was to follow the guidelines when I thought it was reasonably practicable and subject to the particular circumstances at hand.
…
47.… I acted on the assumption at the time that it was acceptable to obtain creditors’ consent to merely the ‘basis’ of the remuneration such as the hourly rates at an early stage (such as at the first or second creditors meeting) without providing an estimate of future fees if it was not reasonably practicable to provide such an estimate upon which creditors could rely.
48.In my view this practice is more beneficial for creditors than if the guidelines were interpreted to mean that no early resolution of consent simply to the `basis’ of time costing can be made until the practitioner is in a position to estimate his fees. If there was such a prohibition on such resolutions at an early stage, creditors in effect would be unable to control an external administrator’s fees at the early stages. The creditors may face an external administrator’s claim for fees on a basis which is unacceptable to them. In addition, the liquidator may find his intended charge-out rate is unacceptable after his first period of work.
…
50.I did not regard a resolution which merely consented to the ‘basis’ of a charge-out rate at an early stage of an external administration where it was not reasonably practicable to provide an estimate of future fees as being contrary to the guidelines. For example, the guidelines refer to it being necessary in most cases to set out the ‘basis’ of fees and the hourly rate in a document of appointment or resolution of creditors.
51.There is no mention of any mandatory requirement that such document or resolution must also include a cap or estimate of future fees. Such a cap or estimate may be impossible in a resolution or document of appointment as the administrator may know nothing about the matter at that stage.
52.The IPAA also advises its members that it is acceptable to say to creditors “I charge IPAA rates” without making it a mandatory requirement also to tell creditors what the estimate is for future fees. If it is acceptable to tell creditors that an administrator charges IPAA rates without an estimate, it ought to be acceptable for the creditors, if they wish, to resolve to accept those rates as a ‘basis’ going forward. This provides certainty to all concerned.
53.At the time, it was widely accepted amongst competent fellow professionals that it was acceptable (indeed desirable) professional conduct to permit creditors, if they wished, to pass at the early stages of an external administration, a resolution which merely set out the ‘basis’ of fees and hourly rates without necessarily also including in the resolution an estimate of future fees. This was common at the time. I never heard of it being suggested that this practice was contrary to the guidelines or was unprofessional conduct, although I did speak to some practitioners who suggested that it was also appropriate (for abundant caution) to give a figure as a ‘best guess’.
…
130.… The reason I did not include a cap, being an estimate of fees upon which creditors could rely, in the resolution [was] because the resolution only set out the ‘basis’ of my fees and on 4 September 1998, being only some three weeks after my appointment, it was not reasonably practicable to provide such an estimate. It was not reasonably practicable at that time to predict with reasonable accuracy the scope and nature of the administration and as a result my fees.
…
168.The actual resolution as to fees, in any event, was more in the nature of a standard resolution setting out the ‘basis’ of my fees upon appointment in accordance with standard industry practice, as described above, rather than an ‘approval’ of any actual remuneration. [Emphasis in original]
In cross examination Mr Gould accepted that since at least 1997 the IPAA had had a “code of professional conduct” by which he was obliged to abide. I do not find this concession particularly cogent, because Mr Gould explained elsewhere the significance that he attached to the IPAA documents.
It is odd that ASIC led no expert evidence before the Tribunal. The Tribunal had before it only the bare IPAA documents, the remuneration resolutions, and Mr Gould’s testimony. However, it should be noted that the Tribunal also thought that it was necessary to give due consideration and weight to the decision of the Board as a specialist panel.
The Tribunal’s reasons relating to Contentions 2.6, 4.4 and 6.3
The Tribunal dealt with Contentions 2.6, 4.4 and 6.3 at [110]-[144].
The Tribunal found it “helpful … for ease of reference” to extract the sections relevant to “Capping” from the Statement, and not from the Guide (at [118]).
The Tribunal identified (at [117]ff) two “sub-issues” in ASIC’s Contentions, with the first sub-issue having two parts:
1.Whether the Statement set a professional standard that related to a duty or function as an administrator; that is to say
(a) whether the Statement established a professional standard; and
(b)if so, whether that professional standard related to a duty or function of a person as an administrator;
2.If the answers to 1(a) and (b) were both “yes”, what did the Statement require Mr Gould to do?
In addressing 1(a) the Tribunal noted (at [123]) that the word “should” appeared in the Statement 17 times, while the word “must” appeared in it only three times, all within the section on “Capping”.
The Tribunal concluded that the use of the word “must” and the expression “it will be necessary” in the section on “Capping” gave the principles to which they referred the force of “a professional standard, rather than merely a principle of best practice” (at [125]).
In relation to (1)(b), the Tribunal referred (at [126]ff) to s 449E of the Act, and concluded that a professional standard that obliged an administrator to comply with certain principles relating to the fixing of his or her remuneration was an aspect of the duty or function of an administrator.
It may be noted that s 449E(1) of the Law (rather than the Act as referred to by the Tribunal), which was relevant to the administrations of Trinbay and Sisterella, provided, relevantly, that the administrator of a company under administration was entitled to such remuneration as was fixed by a resolution of the company’s creditors passed at a meeting convened under s 439A.
In respect of a voluntary winding up, such as that of Popwing, s 499(3) of the Law provided, relevantly, that the creditors might fix the remuneration to be paid to the liquidator.
In relation to Issue 2, the Tribunal stated (at [131]):
In its first sentence, the section on capping [in the Statement] contemplates that, as a matter of best practice, creditors will be asked to approve both a basis (e.g. an hourly rate) and a specified amount (e.g. the fee calculated on that basis in respect of a phase of work). That expectation then flows into the second sentence, which by its use of the word “must” establishes a professional standard that applies to both the basis and the amount of the fee.
The Tribunal continued (at [132]) by saying that taking into account the heading (“Capping”), it was natural to understand the words “upper limit” to have the same meaning as the noun “cap”. The Tribunal then said (at [132]) that the second sentence of the first paragraph meant that if the approval was sought to determine a fee in advance, a broad estimate on which creditors might rely must be included in the resolution, and that if this was not possible prospective approval was not allowed.
The Tribunal considered (at [133]) that the second paragraph of the section, by its use of the expression “it will be necessary”, also set a professional standard. The Tribunal added (at [134]):
The second paragraph also deals with the case in which there is no amount specified in the resolution. As there is always an amount specified in a resolution that retrospectively approves a fee, that can only be a reference to a situation in which the basis of a fee is approved prospectively, but not its amount. In such circumstances, the paragraph says that approval of a specified amount must be sought retrospectively. In other words, a resolution that fixes only the basis of an administrator’s fee is not a resolution that approves the amount of the fee, which must still be approved retrospectively.
The Tribunal saw the question of what the Statement required Mr Gould to do as hingeing upon whether the resolution in question was intended to determine the amount of his fee or not (at [135]). The Tribunal thought that this question was resolved by the fact that according to the evidence no other approval was sought or given. It was clear, therefore, according to the Tribunal, that the original resolution was intended to determine the amount of the fee, and that Mr Gould had failed to comply with the requirement that a broad estimate on which creditors might rely be included in the resolution.
The Tribunal therefore concluded (at [137]) that Contention 2.6 (Trinbay) was established.
The Tribunal considered (at [138]) that the circumstances relating to Sisterella were “essentially the same as those in Contention 2.6”, with the result that Contention 4.4 relating to Sisterella was also established. However, the Tribunal’s close textual analysis of the Capping provision of the Statement cannot be assumed to be applicable to that of the Guide.
In relation to Contention 6.3, the Tribunal thought (at [139]) that the circumstances were “also essentially the same as those in Contention 2.6” except for the fact that Popwing was in liquidation rather than in administration. Again, the close textual analysis of the Capping provision of the Statement cannot be assumed to be applicable to that of the Guide.
There was an additional submission by Mr Gould in relation to Popwing. This was that because the total estimated realisable assets in the liquidation had been reported to creditors and was less than any reasonable estimate of Mr Gould’s future fees, a cap was effectively in place (at [139]). The Tribunal noted Mr Gould’s submission that the Statement’s indication that the IPAA “has no desire to introduce practices that are purely mechanical or prescriptive” supported the taking of a pragmatic approach to the capping requirement (at [140]).
The Tribunal’s conclusion in this respect was as follows (at [141]):
The difficulty with this line of argument is twofold. First, compliance achieved by that path is indirect, opaque and accidental, rather than direct, open and intended. Second, it raises the question of where the line is to be drawn between accidental non-compliance that is acceptable and accidental non-compliance that is not acceptable. Creditors need a cap to be explicit so that they can focus on it in its own right and deliberately decide whether to approve it or not.
I agree, and need say nothing further of Mr Gould’s additional submission in relation to Popwing.
The Tribunal concluded (at [143]) that Contention 6.3 relating to Popwing was also established.
In the result, according to the Tribunal (at [144]), Mr Gould had failed to carry out or perform adequately and properly the duties of a liquidator or an administrator, and infringed ss 1292(2)(d)(i) and (ii) of the Act.
Consideration of Questions associated with Contentions 2.6, 4.4 and 6.3
It is a little surprising that the Tribunal addressed the Statement as if it applied to the remuneration resolutions in Sisterella and Popwing, particularly in view of the Tribunal’s textual analysis of the Capping provision of the Statement.
In the cases of Sisterella and Popwing, the remuneration resolutions were passed well before the Statement took effect on 1 July 2000. It was only the Trinbay remuneration resolution that was passed after that date.
In the case of Sisterella, Contention 4.4 was that Mr Gould “failed to cap his remuneration as administrator in accordance with IPAA guidelines”. In the case of Popwing, Contention 6.3 was expressed identically except that the word “liquidator” replaced the word “administrator”.
The “Capping” provision of the Guide was set out at [54] above. I agree with the Tribunal’s statement (made in relation to the Statement) that the expressions “upper limit” and “cap” are synonymous. Accordingly, Contentions 4.4 and 6.3 fit the Guide well enough, and should be understood to refer to a failure to include an upper limit in the remuneration resolutions.
The definition of “Capping” and the “Capping” provision of the Statement were set out at [65] and [67] above. As noted at [67], the word “Capping” is not used in the Capping provision although that word constitutes its heading. If it were not for the definition and heading, my first impression based on the express terms of the Capping provision alone would have been that the “upper limit” meant simply, and without qualification, a “cap” or “ceiling”, including one fixed arbitrarily. But arguably the upper limit referred to in the Capping provision of the Statement includes the further feature that the amount fixed must be a broad estimate of any phase of the work approved by the creditors. In contrast, there was no suggestion in the express terms of the Capping provision of the Guide that the upper limit must be such an estimate: at least so far as the express terms of that provision go, the upper limit signified any amount selected by the registered liquidator above which there was no approval in place.
None of the remuneration resolutions included a cap or upper limit according to any meaning that those terms might bear.
Mr Gould’s submissions raise three issues. First, did ASIC prove the existence of a “professional standard” that made it mandatory for a cap to be included in certain circumstances? Second, if so, did those circumstances, on the proper construction of the Capping provisions and the remuneration resolutions, exist in the present cases? Third, what, if any, was the effect of the evidence led by Mr Gould? I will address these issues in turn.
(1)Did ASIC prove the existence of a “professional standard” that made it mandatory for a cap to be included in certain circumstances?
In Dean-Willcocks, two Codes of Professional Conduct issued by the IPAA and the Institute of Chartered Accounts in Australia dealt with professional independence, conflicts of interest, and disclosure of relationships that might be thought to impinge on the independence of a registered liquidator acting as administrator. Moreover, CALDB relied on evidence of an expert (Mr Lombe).
The words “or is otherwise not a fit and proper person to remain registered as a liquidator” provide an alternative to the criteria that precede in subparas (i) and (ii). Paragraph (d) must, however, be read as a whole. Its criteria can be analysed as follows (I will refer only to para (i) but the same analysis applies to para (ii)):
(1)failure to perform adequately and properly the duties of a liquidator; or
(2) being otherwise not a fit and proper person to remain registered as a liquidator.
The word “otherwise” shows that the provision takes it for granted that a failure of the kind described in (1) will, without more, demonstrate that the person is not a fit and proper person to remain registered as a liquidator. Consistently with this understanding, the expression “the duties of a liquidator” directs attention, not to a specific duty or even to two or more specific duties, but to the duties in general of a liquidator. Of course, whether a registered liquidator has failed to perform adequately and properly the duties in general of a liquidator will be decided by reference to his or her failure to perform specific duties.
Both limbs (1) and (2) call for an exercise of assessment, evaluation and judgment in relation to the registered liquidator’s conduct. It is not enough, for example, in a mechanical and arithmetical way, simply to seek to identify a minimum of two failures to perform adequately and properly particular duties.
Whether the Capping provisions in the Guide and the Statement were “professional standards” of the kind to which Tamberlin J was referring in Dean-Willcocks, depends on whether they purported to establish levels of “adequate” and “proper” performance that a registered liquidator must attain at peril of enlivening criterion (1) or criterion (2) above – a serious matter. I do not think that they did. Two considerations lead me to this conclusion. First, neither Capping provision was contained in a document that purported to lay down standards of professional conduct of that kind. Second, the ambiguous and loose language of the Capping provisions themselves is not what one would expect of such a standard.
The Guide purported to provide guidance, and stated that it was not to be used in every instance. These features characterised the Guide as a whole. There is no reason to exclude from them the Capping provision.
I turn now to the language of the Guide’s Capping provision.
The expression “approved prospectively” occurred in the Capping provision of the Guide (and of the Statement). The expression gave rise to debate on the hearing. I agree with ASIC that there was an approval of remuneration prospectively in the remuneration resolutions in the present three cases. I reach this view as a matter of construction of those resolutions and without reference to the absence of any subsequent approval. Accordingly, the obligation to include an upper limit was enlivened.
There are, however, other problems with the terms of the Capping provisions.
Assume that remuneration was approved in advance in the form of a lump sum. What, in those circumstances, is the significance of the associated obligation to include an “upper limit”?
Is the “specified amount” requirement of the Guide’s Capping provision satisfied by the statement of an amount per hour?
What is the connection between the first part of the first sentence and the second part: between the exhortation to include a specified amount and the obligation, in those cases where remuneration is approved prospectively, to include an upper limit?
The second sentence begins by assuming that an amount may not be specified or that an amount specified may be exceeded. Does this mean that it is contemplated that an upper limit also may not be included, notwithstanding the use of the word “must”?
No doubt a professional standard of the kind contemplated by Tamberlin J in Dean-Willcocks may be attended by ambiguity. Moreover, as indicated above, I accept that in the present cases remuneration was approved prospectively. However, the loose language and uncertainty of the Capping provision of the Guide suggests that it was not intended by the IPAA to be a professional standard in the sense described.
The Statement likewise does not establish a professional standard in that sense. First, it is a Statement of “Best Practice”, not of a minimum required. As the “Conclusion” makes clear, the Statement was not intended to be prescriptive (see [69] above).

Secondly, there are again certain ambiguities touching the Capping provision. I referred to two of these at [67] and [107] above. Whereas the Capping provision in the Guide predicated a “resolution for remuneration”, that in the Statement predicates a “resolution for approval of remuneration”. As in the Guide, it is unclear what the “specified amount” is to be a specified amount of.
As in the case of the Guide, it is unclear whether the second paragraph signifies that an upper limit need not be included, notwithstanding the use of the word “must”.
The ambiguities support the view that, as in the case of the Guide, the IPAA did not intend the Capping provision of the Statement to be a professional standard in the sense described.
(2)Did the circumstances that activated the obligation to include a cap exist in the present cases?
As indicated above, in the case of all three companies Mr Gould’s remuneration was approved prospectively with the consequence that the Capping provision was enlivened. Mr Gould did not include an upper limit as required by the Capping provision of the Guide or the Statement.
(3) What, if any, was the effect of the countervailing evidence led by Mr Gould?
Mr Gould submits that his uncontradicted evidence set out at [73] above shows that it would not have been reasonably practicable to arrive at a cap that was a reliable estimate, with the consequence that inclusion of a cap would have been apt to mislead. He also calls in aid a professional standard. This is a Code of Professional Conduct – Professional Statement F.6 issued in September 1997 jointly by the Australian Society of Certified Practising Accountants and the Institute of Chartered Accountants in Australia. Paragraph 5 of that document stated:
(a)A member in public practice must not make a representation that specific professional services in future periods will be performed for either a stated fee, estimated fee, or fee range if at the time of the representation, such fees will be or are likely to be substantially increased and the prospective client is not advised of that likelihood. Before undertaking an assignment, a member in public practice must:
(i) advise the client of the basis on which fees will be compiled; and
(ii) clearly define the billing arrangement.
(b)The client must be advised without delay of any changes to the fee structure or billing arrangements which may become necessary during the course of an assignment or between assignments.
The Tribunal did not accept Mr Gould’s evidence. His evidence in cross-examination before the Tribunal was that the “overarching consideration” was that a cap must be an amount that creditors could reasonably rely on, and that in the case of these three companies there were a number of imponderables, including the effect of litigation that might continue or commence, that made it impossible for Mr Gould to give a reliable estimate.
At one stage Mr Gould said that while he could not have given a “hard and fast cap” he could have given an estimate expressed to be subject to a warning that it might be unreliable because of the uncertainty and possible “blow out” associated with litigation. Mr Gould also said that he preferred to work at hourly rates and came from a culture in which a registered liquidator charged for his or her time on an hourly basis.
Mr Gould denied that he could have included a non-misleading cap, but the Tribunal did not find his evidence satisfactory and referred to inconsistencies in it.
No error of law is shown in the Tribunal’s failing to be persuaded by Mr Gould’s evidence that to state a cap would have been misleading.
Conclusion
For the reason given in answer to (1) above, the Tribunal erred in law in concluding that the terms of s 1292(2)(d)(i) and (ii) were satisfied in respect of the failure to cap.
The Questions (set out at [43] above) associated with Contentions 2.6, 4.4 and 6.3 should be answered as follows:
Question 1:                  No
Question 2:                  No
Question 3:                  No
Question 4:                  Not necessary to answer
Question 4A:               Not necessary to answer
Question 5:                  Not necessary to answer
Question 6:                  Not necessary to answer
Question 7:                  Yes
Question 8:                  Yes
B.       Non-compliance with s 450E(2) by failure to state “(subject to deed of company arrangement)” – Questions associated with Contentions 2.9 and 4.6
The Contentions
Contentions 2.9 and 4.6 asserted contraventions by Mr Gould of s 450E(2) of the Law and of the Act (the provisions were identical). Contention 2.9 related to Trinbay and Contention 4.6 to Sisterella. Both companies were the subject of DOCAs and it follows that it was para (ii) rather than para (i) of s 1292(2)(d) that was applicable.
Section 450E of the Law and of the Act provided:
(1)A company under administration must set out, in every public document, and in every negotiable instrument, of the company, after the company’s name where it first appears, the expression (“administrator appointed”).
(2)Until a deed of company arrangement terminates, the company must set out, in every public document, and in every negotiable instrument, of the company, after the company’s name where it first appears, the expression (“subject to deed of company arrangement”).
(3)An offence based on sub-section (1) or (2) is an offence of strict liability.
Section 88A(1) of the Law and of the Act provided:
Subject to this section, public document, in relation to a body, means:
(a)an instrument of, or purporting to be signed, issued or published by or on behalf of, the body that:
(i)when signed, issued or published, is intended to be lodged or is required by or under this Act or the ASIC Act to be lodged; or
(ii)is signed, issued or published under or for the purposes of this Act, the ASIC Act, or any other Australian law; or
(b)an instrument of, or purporting to be signed or issued by or on behalf of, the body that is signed or issued in the course of, or for the purposes of, a particular transaction or dealing; or
(c)without limiting paragraph (a) or (b), a business letter, statement of account, invoice, receipt, order for goods, order for services or official notice of, or purporting to be signed or issued by or on behalf of, the body.
ASIC relied on the expression “business letter” in para (c).
ASIC gave the following particulars of the two Contentions:
Trinbay – Contention 2.9
(i)Clause 10 of the DOCA referred to the DOCA bank account as being styled “Trinbay Pty Limited (Administrator Appointed)” rather than “Trinbay Pty Ltd (subject to deed of company arrangement)”.
(ii)Mr Gould wrote a letter dated 19 February 2001 to Mr Nick Murray of Jigsaw Entertainment Pty Limited (Jigsaw) showing “Trinbay Pty Ltd (Administrator Appointed)” rather than “Trinbay Pty Ltd (subject to deed of company arrangement)”.
(iii)Mr Gould wrote a letter dated 2 April 2003 to the Australian Taxation Office (ATO) showing in two places “Trinbay Pty Ltd (Administrator Appointed)” rather than “Trinbay Pty Ltd (subject to deed of company arrangement)”.
Sisterella – Contention 4.6
(i)Clause 10 of the DOCA referred to the bank account as “Sisterella Pty Limited (Administrator Appointed)” rather than “Sisterella Pty Limited (subject to deed of company arrangement)”.
(ii)Items of correspondence referring to the company as “Sisterella Pty Limited (Administrator Appointed)” rather than “Sisterella Pty Limited (subject to deed of company arrangement)”.
Associated questions raised by the FASNA
The following questions were raised in the FASNA in relation to Contentions 2.9 and 4.6:
Question 9: Whether the letters in question were “business letters” within the defined meaning of a “public document” set out in s 88A(1)(c) of the Corporations Law?
Question 10: Whether the letters in question “purport” to be “signed by or on behalf of the company” within the defined meaning of a “public document” set out in s 88A(1)(c) of the Corporations Law?
Question 11: Whether the Tribunal acting reasonably, judicially and properly instructed as to the law was required to dismiss Contentions 2.9 and 4.6?
The Tribunal’s reasons relating to Contentions 2.9 and 4.6
The Tribunal dealt with Contentions 2.9 and 4.6 at [145] – [160].
The Tribunal recorded (at [150]) that in relation to Sisterella “the items of correspondence” on which ASIC relied were:
·a letter dated 30 September 1998 from Mr Gould to Ms Colleen Platford, a partner at Gilbert & Tobin who was acting for a creditor, headed “Sisterella Pty Limited (Administrator Appointed)”;
·a letter from Mr Gould dated 3 November 1998 to Mr Klaus Selinger, a director and creditor of Sisterella, headed “Sisterella Pty Limited (Administrator Appointed)”; and
·a fax from Mr Gould to BRL Hardy Wine Company (Hardy) dated 14 November 2000 headed “Sisterella Pty Limited (Administrator Appointed)”.
The Tribunal noted that in his oral evidence, Mr Gould said that he did not have any separate company letterhead made up, and that he corresponded in relation to each company on his own letterhead. The Tribunal also noted (at [152]) that before the Board, Mr Gould had admitted that some correspondence was incorrectly titled “Trinbay Pty Limited (Administrator Appointed)” rather than “Trinbay Pty Limited (subject to deed of company arrangement)”.
Mr Gould submitted to the Tribunal that neither bank account was a public document but a document of the bank, and that no actual cheques had been relied upon. He submitted that the letters to which ASIC pointed were his own and did not purport to have been written on behalf of either company and were not part of a process of a business transaction or contract.
The Tribunal accepted Mr Gould’s submission in relation to the cheques, saying that in order to establish the statutory offence, which was one of strict liability, at least one cheque bearing the incorrect description would need to be in evidence (at [154]).
The Tribunal concluded (at [155]), however, that each of the letters was a “business letter” within para (c) of s 88(A)(1). The Tribunal said that although Mr Gould “ostensibly signed them as administrator, as a matter of substantive content they purported to be written on behalf of the company, relating directly to its dealings and tax liabilities” (at [156]).
Paragraphs [157] – [159] of the Tribunal’s reasons were as follows:
157.The applicant contended that, being signed by the applicant as administrator, they did not “purport” to be “signed by or on behalf of the company”. That presupposes that the two capacities are mutually exclusive, in that a person signing a document as administrator cannot also be signing or issuing it on behalf of the corporation. No authority for that proposition was cited and we do not think it is self-evidently sound. In any event we consider that in substance they purported to be issued on behalf of the respective companies.
158.The applicant's oral evidence referred to above did not relate specifically to the documents in question, but provides some general confirmation that at least on some occasions the applicant incorrectly titled some correspondence. When later asked whether he had admitted infringing s 450E(2), he said, after a rather convoluted explanation:
…
I am saying I may – as a matter of practice normally, when the deed is on foot we would normally, you know, style myself on the letterhead “subject to deed of company arrangement” even though I’m not sure legally whether, in fact, it's required in my own personal letterhead situation (…)
…
159.In that passage the applicant appears to be conceding that he did not always follow his normal practice of using the description “subject to deed of company arrangement”, although he did not concede that he was required to do so when using his own letterhead.
The Tribunal therefore concluded (at [160]) that except in relation to the bank accounts and cheques, Contentions 2.9 and 4.6 were made out, and that by contravening s 450E(2) Mr Gould had failed to carry out or perform adequately and properly the duties described in s 1292(2)(d)(ii) of the Act. The Tribunal added: “At the same time, we do not consider the failure to be a serious one”.
Consideration of Questions associated with Contentions 2.9 and 4.6
ASIC’s Notice of Contention did not relate to the Tribunal’s finding against it in respect of the bank accounts. It is only Mr Gould’s appeal relating to the letters that needs to be considered.
Subsections (1) and (2) of s 450E create offences of strict liability by the company under administration or the company subject to a DOCA as the case may be. Mr Gould did not suggest, however, that an administrator’s conduct would not fall within s 1292(2)(d)(ii) if he or she caused the company to contravene s 450E(1) or (2) in respect of business letters of the company.
All of the letters were written after the relevant DOCA had been executed. It may be accepted immediately that they erroneously stated “(administrator appointed)” and should have stated “(subject to deed of company arrangement)”.
This, however, does not dictate the answers to be given to Questions 9 to 11 above.
(1)Were the letters in question “business letters” in question within s 88A(1)(c) of the Law and of the Act?
In National Education Advancement Programs (NEAP) Pty Ltd v Ashton (1995) 33 IPR 281, Young J had to consider the question whether s 219 of the Law required an examination paper marketed by the plaintiff for use by schools for trial examinations to bear the plaintiff’s ACN number. The answer turned on the question whether examination papers fell within s 88A of the Act. His Honour said (at p 293):
An examination paper is not within the items specifically excluded from the definition in s 88A and one would have thought that such papers are closer to the categories of business letters etc than what is exempt, namely packaging. However, it does seem to me that the exercise in statutory interpretation is to look to see what is ejusdem generis with business letter, statement of account, invoice, receipt etc. All these documents are documents used in trade or commerce. An examination paper or a book or other writings which are intellectual property would seem to me to be in a different class.
Young J said that while it was difficult to work out from ss 88A and 219 exactly where to draw the line, the test seemed to be whether the document concerned was one that was possibly part of a process of a business transaction or business contract involving the company. He said that if the document was non-contractual, the ACN number did not have to appear, because the purpose of s 219 appeared to be to make it clear that when a person was dealing with a company, exactly which company in perhaps a group of similarly named companies or companies using similar trading names, was the one with which the person was dealing.
In my opinion, the purpose of s 450E(2) is generally similar: to make it clear to persons who are having or are contemplating having business dealings with the company or extending credit to it, that they are or will be dealing with a company that is subject to a DOCA.
All five letters concerned were addressed to creditors of the particular company, Sisterella or Trinbay, that was subject to a DOCA.
The letter to Mr Murray of Jigsaw, a creditor of Trinbay, discussed the Trinbay DOCA.
The letter to the ATO was dated some two years and four months after the date of the Trinbay DOCA. The letter informed the ATO that Mr Gould had not been able to procure litigation funding, that there was no prospect of recovery of funds, that the administration had been concluded, and that it was likely that Trinbay would be deregistered. In view of the lapse of time and the content of the letter, the ATO must have known that Mr Gould was a DOCA administrator.
The letter to Ms Platford of Gilbert and Tobin, who represented a creditor of Sisterella, namely, RG Capital Theatrical Productions Pty Ltd, said that the letter was enclosing a copy of the Sisterella DOCA as Ms Platford had previously requested.
The letter to Mr Selinger referred to “the terms of the Administration agreed to by creditors”, and a summons served on him and Mr Jacobsen by the ATO “concerning the non-payment of Group Tax”. Mr Selinger and Mr Jacobsen were present at the meeting of creditors on 4 September 1998 at which the resolution that Sisterella should execute a DOCA was passed. In all of these circumstances and as a director of Sisterella, Mr Selinger must have known that Sisterella was subject to a DOCA.
Finally, the letter to Hardy referred to a fax from that company dated 10 November 2000 advised that there had been no correspondence of substance concerning Sisterella since 1998, and further advised that there was “no likelihood of any further dividend being paid by the company”. The letter was written more than two years after Sisterella executed the DOCA on 25 September 1998. I infer from the lapse of time and the content of the letter that Hardy understood that Sisterella had executed a DOCA.
The fact that the creditors to whom the letters were addressed knew that the company was the subject of a DOCA, as I infer that they did, does not, of course, require a conclusion that the letters were not “business letters”. It is, however, relevant to the proper characterisation of the letters. All five letters were addressed to pre-existing creditors who were not having or contemplating having business dealings with the company, and related to the progress of what they must have understood was a DOCA administration. The ATO had never had business dealings with Trinbay and the business dealings that the other creditors may have had with Trinbay or Sisterella had long since ended.
In my opinion the letters were not “business letters” of either Trinbay or Sisterella.
(2)Were the letters “of” the company concerned or letters that purported to be signed or issued by or on behalf of the company concerned?
Section 450E(2) requires that “the company set out, in every public document, and in every negotiable instrument of the company” (my emphasis) the description “(subject to deed of company arrangement)”. A cheque drawn by Mr Gould on his office account would not be a negotiable instrument “of” the company. Similarly, a letter written by Mr Gould on his letterhead would not ordinarily be a document “of” the company, although it might relate to the company.
The relevant expression used in s 450E(2)(d) is “… of, or purporting to be signed or issued by or on behalf of”. The same observations, however, apply.
The letters were all on the letterhead of “Vanda R Gould … Chartered Accountant” and were signed by Mr Gould above the word “Administrator”. They were all addressed to creditors and informed them in relation to aspects of the administration.
In each case, the letterhead and the manner of signature by Mr Gould showed that he was the writer, not the company through him. A letter on the company’s letterhead on which the form of signature was the name of the company with a subscription by Mr Gould as administrator would clearly be different. I need not discuss intermediate hypothetical sets of circumstances.
In my opinion the letters were not letters “of” the company concerned (Sisterella or Trinbay, as the case may be) and did not purport to be signed or issued by or on behalf of the company. The fact that Mr Gould designated himself in the letters as “Administrator” does not persuade me against this conclusion. Mr Gould was thereby merely informing the addressee of the capacity in which he, Mr Gould, was entitled to write and of the reason why the addressee should regard the information conveyed by the letter as reliable.

Further, the Tribunal found (at [46]) that the Contentions in question were not completely novel. In the hearing before the Board, Mr Gould had responded to Contentions 6.4, 6.5, 6.6 and 6.7. In his submissions to the Board, Mr Gould raised the distinction between paras (i) and (ii) of s 1292(2)(d), and dealt substantively with Contentions 6.5, 6.6, 6.7 and 6.7A. His submissions did not distinguish between paras (i) and (ii).
ASIC submits that the Tribunal’s statement that the new Contentions were not completely novel is not surprising bearing in mind that the amendment that was made to Contentions 6.5, 6.6 and 6.7A was only to rely on para (i) in addition or in the alternative to para (ii). That is to say, according to ASIC’s submission, the “oppression” of which Mr Gould complains is that in the proceeding before the Tribunal, ASIC amended Contentions 6.5, 6.6 and 6.7A to allege that Mr Gould failed to perform adequately and properly the duties of a liquidator, rather than those required by an Australian law to be carried out or performed by a registered liquidator.
In relation to Contention 2.1, ASIC submits that there was no prejudice or oppression. I set out the original form of Contention 2.1 and that which ASIC sought to have substituted, at [264] and [266] above. The facts and circumstances underlying the previous Contention 2.1 that was before the Board and those underlying the newly formulated Contention 2.1 were the same, as the cross-examination of Mr Gould demonstrates.
ASIC points out that although Mr Gould complains of unfairness and oppression, his submissions do not point to any particular changes made or to unfairness or oppression arising from the making of those changes.
Finally, ASIC submits that Mr Gould’s argument that it is unfair that he was denied a merits review after an adverse finding by the primary decision maker could also be said in relation to the facts in Shi. A person in Mr Shi’s position could be found by the Tribunal to be unfit based on new facts that emerged after the original decision was made. According to the High Court, however, the fact that there might be no merits review on the new facts as found by the Tribunal was not an impediment to the Tribunal’s acting on those new facts.
Consideration of Question 24
In my opinion, ASIC’s submissions should in substance be accepted.
The proceeding before the Tribunal was a new and independent proceeding in which the Tribunal was required, for the protection of the public, to arrive at the correct or preferred decision on the evidence before it.
The question of the reformulated Contentions 2.1, 6.5, 6.6 and 6.7A arose and was dealt with at the outset of the Tribunal proceeding, and in this important respect the circumstances are quite different from those on the basis of which the Board had refused ASIC leave to amend. Before the Tribunal, but not before the Board, Mr Gould had the opportunity of preparing for the hearing and adducing evidence, expert and non-expert, in answer to the Contentions as amended.
There was no trial of Contentions 2.1, 6.5, 6.6 or 6.7A on their merits before the Board. As a consequence of the Board’s refusal of leave to amend, Contention 2.1 was “Withdrawn” and Contentions 6.5, 6.6 and 6.7A was “Not accepted”.
The United States case of Green v United States is distinguishable. The primary objective of the sanctions for which s 1292(2) provided was to protect the public where a person was shown not to be a fit and proper person to remain registered as a liquidator and as such to perform the duties of a liquidator or administrator. The criminal sanction for first degree murder is quite different in that the right of the accused to be treated fairly assumes the greatest importance. In the case of the disciplinary proceedings against Mr Gould, the protection of public was the dominant consideration. This factor also tells against other submissions made by Mr Gould, such as his submission asserting delay and oppression.
Question 24 (set out at [260] above) should be answered “no”.
Since writing the above, I have become aware of the following authorities (not referred to by counsel) none of which are inconsistent with the views that I have expressed above, and in which there are some passages generally supportive of them: Walton v Gardiner (1993) 177 CLR 378 esp at 396-398, 420; Health Care Complaints Commission v Litchfield (1997) 41 NSWLR 630 at 634, 635 636; Re Barings plc (No 2) [1999] 1 All ER 311 at 318h, 327 c–e, 331 b–d, 339e. See too Joshua Kulawec, Double jeopardy in the regulatory state”, Reform, Issue 78, Autumn 2001, 1–4.
F. ASIC’S NOTICE OF CONTENTION RELATING TO CONTENTIONS 2.1, 2.11, 6.6 AND 6.7A
The Contentions
Contentions 6.6 and 6.7A were referred to at [213] and [215] above and Contention 2.1 at [259] above. It therefore remains only to set out Contention 2.11, which, together with the particulars that ASIC gave of it, was as follows:
2.11Mr Gould failed to hold a meeting pursuant to section 445F(1)(a) of the Law to terminate the DCA.
Particulars
2.11.1   Section 445F(1) of the Act states:
The administrator of a deed of company arrangement:
(a)may at any time convene a meeting of the company’s creditors; and
2.11.2On 2 April 2003 Mr Gould wrote to the Australian Taxation Office and advised, “as no litigation funding could be achieved to litigate …the administration has now been concluded and it is likely that the company will be struck off”.
2.11.3   Having regard to the following:
(i) terms of the DCA:
Clause 5.2:
The Administrator shall in his absolute discretion determine whether the legal proceedings should be commenced and/or discontinued.
Clause 8.1:
This deed includes the Prescribed Provisions except for Prescribed Provisions 4, 8, 9, 10 and 11.
Clause 3 of the Prescribed Provisions:
If the administrator or the committee of inspection (sic) determines that it is no longer practicable or desirable either to continue to carry on the business of the company or to implement this deed, the administrator:
(a)    may cease to carry on the business …
(b)must summon a meeting of creditors for the purpose of passing a resolution under section 445C(b) of the Corporations Law; and
(c)must forward to each creditor not less than 14 days prior to the meeting an up-to-date report as to the position of the company accompanied by such financial statements as the administrator thinks fit, together with a statement that he or she does not think it practicable or desirable to carry on the business of the company or to continue this deed and that this deed will be terminated if the company’s creditors resolve.
(ii)he last charged for his services on 29 August 2002 (par. 2.12.3); and
(iii)based on Mr Gould’s comments in the letter to the Australian Taxation Office then as litigation could not proceed and the DCA is unable to be completed.
ASIC considers that as of 2 April 2003, if not earlier, Mr Gould should have determined that it is no longer practicable to implement the DCA.
ASIC therefore contends that Mr Gould should have convened a meeting of creditors pursuant to section 445F of the Law for the purpose of passing a resolution under section 445C(b) of the Law to terminate the DCA.
2.11.4To date, from the documents lodged with ASIC, it does not appear that Mr Gould has held the meeting to terminate the DCA.
ASIC’s Notice of Contention
The Notice of Contention raises the following purported question of law in respect of Contention 2.1:
(1) ...
a.Whether the Tribunal erred in finding that the resolution of the company on 11 September 2000 could as a matter of law operate on a prospective or nunc pro tunc basis.
b.Whether the Tribunal erred in finding that the said resolution did operate prospectively.
In relation to Contention 2.1, the Notice of Contention asserts that the Tribunal erred in “finding that the resolution of [Trinbay] appointing [Mr Gould] as voluntary administrator could and did operate on a prospective or nunc pro tunc basis”.
The Notice of Contention raises the following purported question of law in respect of Contention 2.11:
(2) ... whether the Tribunal erred in finding that upon a proper construction of the DCA, there was no requirement for a meeting of creditors.
In relation to Contention 2.11, the Notice of Contention asserts that the Tribunal accepted Mr Gould’s argument that under the terms of the Trinbay DOCA, if Mr Gould should decide to abandon all legal proceedings the DOCA terminated 30 days after the final distribution without the requirement for a meeting of creditors. The Notice of Contention asserts that it was implicit in the Tribunal’s finding that a final distribution was in fact made but there was no evidence from which the Tribunal could have made such a finding.
The Notice of Contention raises the following purported question of law in respect of Contentions 6.6 and 6.7A:
(3) ...whether the Tribunal erred in:
a.Failing to consider whether the form 524’s [sic] contained information that was ‘false’ in a material particular.
b.Finding that the form 524’s [sic] were not misleading.
In relation to Contentions 6.6 and 6.7A, the Notice of Contention asserts:
(a)that the Tribunal erred in failing to consider whether the statement in the Forms 524 was false in a material particular, and considered only whether it was misleading in a material particular; and
(b)that the Tribunal erred in considering whether the statement was misleading in a material particular by applying a test that was limited to whether the five creditors of Popwing would have been misled.
The AAT’s reasons in relation to Contentions 2.1, 2.11, 6.6 and 6.7A
Contention 2.1 – Mr Gould’s consent to appointment as administrator of Trinbay
The Tribunal dealt with Contention 2.1 at [92]-[109].
I referred earlier to the factual circumstances surrounding Mr Gould’s appointment as administrator of Trinbay and set out the provision of ss 436A and 448A.
The Tribunal noted (at [94]) that it was not disputed that:
·on 14 August 2000 two directors of Trinbay signed a circular minute resolving to appoint Mr Gould as administrator;
·the circular resolution was forwarded to Mr Gould by facsimile on the same day;
·on 11 September 2000, the same circular resolution appointing Mr Gould as administrator, by now completed by all three directors, was passed;
·on 12 September 2000 Mr Gould indicated that he would not consent to act as administrator until he had seen the books of the company;
·on 3 October 2000 Mr Gould signed a consent to act;
·no consent to act was found on the relevant file, but Mr Gould confirmed that he consented only on 3 October 2000.
ASIC’s case was that as Mr Gould had not consented in writing to appointment prior to the resolution of 11 September 2000 his appointment was invalid. Its contention was that a registered liquidator performing his duties adequately and properly would have ensured that the resolution of appointment was made after his written consent, and that this was something that Mr Gould failed to do.
It was common ground before the Tribunal that the process and validity of appointment were of fundamental importance. The Law stipulated that the administration began when an administrator “was appointed” (s 435C) and required that the administrator convene the first meeting of creditors within five business days after the administration began (s 436E). That importance of identifying the time when an administrator was appointed is obvious.
Mr Gould admitted in evidence before the Board that he knew that his consent had to precede the execution of the resolution of appointment. Before the Tribunal, however, Mr Gould denied that he had been aware that he could not be appointed by the resolution of 11 September because s 448A had not been complied with at that time. The Tribunal stated (at [97]):
His evidence before the tribunal conflicted with his testimony before the Board. He had argued that the resolution had been prospective as regards consent and had advanced a number of other speculative theories in justification of his conduct.
The Tribunal dealt with the question of whether Mr Gould’s consent could operate nunc pro tunc. It referred to Ascot Investment and Management v Livestock Genetics (1999) 205 LSJS 247 (Ascot) and Re Anderson and Companies Auditors and Liquidators Disciplinary Board [2007] AATA 1540 (Anderson).
The Tribunal noted that in Ascot Smith DCJ held that an administrator’s written consent to the beginning of a proceeding against a company in administration could operate nunc pro tunc. Section 440D of the Law provided that during the administration of a company, a proceeding in a court against the company or in relation to any of its property could not be begun or proceeded with, except with the administrator’s written consent or with the leave of the Court. The Tribunal said (at [100]) that Smith DCJ had held that s 440D did not “invalidate that part of the proceedings that had unfolded before the date of consent”.
In Anderson the Tribunal reviewed a decision under s 1292(2)(d)(ii) of the Act. It was alleged that an administrator had not complied s 439A(4) of the Act. The administrator had been appointed on 12 February 2004 but had not consented to act until four days later. Although the point was not argued, neither ASIC, nor the Board nor the Tribunal expressed any doubt about the validity of the appointment.
The Tribunal noted (at [102]) that ASIC did not dispute the correctness or applicability of Ascot or Anderson. The Tribunal concluded that there was no legal impediment to the adoption of an appointment resolution that operated conditionally on the appointee’s consenting to the appointment. The Tribunal entered a caveat: the consent must be given within a timeframe that was appropriate to the procedure in question, but the Tribunal saw no difficulty in this respect in the present case in which the lapse of time was of only some three weeks.
The Tribunal regarded Mr Gould’s efforts to obtain a further resolution after he signed the consent on 3 October 2000 as steps taken for more abundant precaution and for the avoidance of doubt.
The Tribunal was not troubled by inconsistencies between answers that Mr Gould gave before the Board and before the Tribunal, thinking that they were explicable.
Concluding that Mr Gould was validly appointed as administrator of Trinbay, the Tribunal decided that Contention 2.1 failed.
Contention 2.11 – termination of DOCA and summoning of meeting of creditors
The Tribunal dealt with contention 2.11 at [192]-[199].
The Tribunal noted that the Trinbay DOCA included, by reference, cl 3 of the prescribed provisions, which stated:
If the administrator or the committee of inspection determines that it is no longer practicable or desirable either to continue to carry on the business of the company or to implement this deed, the administrator:
(a) may cease to carry on the business…
(b)must summon a meeting of creditors for the purpose of passing a resolution under s 445C(b) of the Corporations Law; and
(c)… .
Section 444A(5) of the Law provided that a DOCA was taken to include the “prescribed provisions”, except so far as the DOCA provided otherwise. Regulation 5.3A.06 of the Corporations Regulations provided that for the purposes of s 444A(5) of the Law, the prescribed provisions were those set out in Schedule 8A to the Regulations. Clause 3 within Schedule 8A was to the effect set out above.
ASIC noted (at [193]) that Mr Gould last charged for his services in respect of Trinbay on 29 August 2002 and that on 2 April 2003 he wrote to the ATO advising that “[a]s no litigation funding could be achieved to litigate… the administration has now been concluded and it is likely that the company will be struck off”. ASIC submitted that as at 2 April 2003, if not earlier, Mr Gould had determined that it was no longer practicable to implement the DOCA and that for this reason he should have convened a meeting of creditors under s 445F of the Law for the purpose of their passing a resolution under s 445C(b) to terminate the DOCA.
Mr Gould gave evidence before the Tribunal to the effect that he exercised his discretion under the DOCA in a different way from that reflected in his letter of 2 April 2003, and concluded that the interests of creditors would be better served by keeping the DOCA on foot. Perhaps understandably, ASIC attacked Mr Gould’s credit in this respect.
The Tribunal noted (at [195]) that Mr Gould had contended that it was never “impracticable to implement” the DOCA in any event. The Tribunal observed (at [196]) that cl 5.3 of the DOCA provided that if Mr Gould as DOCA administrator decided to abandon all legal proceedings, any unspent money was to be made available on a final distribution under cl 9.1. Mr Gould submitted that by cl 18.1 (coupled with the definition of “Termination Date”) the DOCA terminated thirty days after the final distribution in accordance with its terms and as permitted by s 445C of the Law. Such a termination would come about without any need or obligation to convene a meeting of creditors.
Section 445C of the Law provided:
A deed of company arrangement terminates when:
(a) the Court makes under section 445D an order terminating the deed;
(b)the company’s creditors pass a resolution terminating the deed at a meeting that was convened under section 445F by a notice setting out the proposed resolutions; or
(c)if the deed specifies circumstances in which it is to terminate – those circumstances exist;
whichever happens first.
The Tribunal saw no need to make a finding as to Mr Gould’s credit. Rather, relying on s 445C(c) of the Law, the Tribunal accepted that under the terms of the DOCA if Mr Gould decided to abandon all legal proceedings, the DOCA terminated thirty days after the final distribution without the need for a meeting of creditors. Consequently, so the Tribunal held, Mr Gould was not under an obligation to convene a meeting.
For this reason the Tribunal found Contention 2.11 not established.
Contentions 6.6 and 6.7A – Lodgement of Forms 524 that contained a false or misleading statement (Contention 6.6) and failure to supervise members of staff (Contention 6.7A)
I set out the facts relating to Contentions 6.6 and 6.7A at [217] - [219] above and gave an account of the Tribunal’s reasons in relation to them at [221] ff above.
Consideration of ASIC’s Notice of Contention in so far as it relates to Contention 2.1 and Question (1) in the Notice of Contention
Although the constitution of Trinbay is not in the Appeal Book, the parties seem to have accepted that the “circular minute” or “circular resolution of directors” was not effective until the third of the directors signed it on 11 August 2000. Of course, Mr Gould could not be appointed to the office of administrator unless and until he consented.
The terms of the resolution do not identify the point of time at which the appointment was intended to take effect. The passive subjunctive “be appointed” is open ended, as distinct from, for example, the passive present “is hereby appointed”.
In his submissions, counsel for ASIC refers to “a prospective or nunc pro tunc basis as regards the appointee’s consent”, as if the two were synonymous, but they are not. It is the resolution that may be prospective and the consent that may operate nunc pro tunc.
I do not think that the resolution, properly construed, purported to appoint Mr Gould as administrator then and there and without his consent. It is unlikely that the directors intended that the resolution have that effect, and an improbable construction is to be avoided if possible. Rather, on its proper construction the resolution was to have a continuing but latent and contingent operation to be enlivened and to have present effect only once Mr Gould accepted the appointment by doing whatever was necessary for that purpose. What was necessary for that purpose was for him to consent in writing to the appointment.

I do not see any basis for criticism of Mr Gould’s letter of 27 September 2000 which made it clear that he had not yet accepted appointment as administrator although he could see no reason for not doing so in the near future provided certain matters were resolved.
If my construction of the resolution is correct, Mr Gould was not appointed as administrator until he consented in writing to the appointment. Immediately he consented in writing, the prospective appointment became a present appointment. Logically, Mr Gould’s consenting in writing immediately preceded that event.
Paragraph (b) of s 448A creates no difficulty for the construction suggested. There will be cases where there is a lapse of time between the signing of the consent on the one hand and the passing of the resolution by the board of directors and issue of the written appointment by the company under s 448A on the other hand. Paragraph (b) makes it clear that in such a case at the time when the appointment takes effect the appointee must not have withdrawn his or her consent.
Similarly, it is not to the point to say, as ASIC submits, that on the construction suggested, the board of a presently insolvent company could pass a resolution appointing an administrator not to take effect until the registered liquidator consents. There is no obligation on the board of a presently insolvent company to resolve to appoint an administrator at all or to do so at any particular stage of an insolvency. As the Tribunal acknowledged, there may be a problem where the lapse of time between the passing of the resolution and the giving of the written consent is too great, but that was not the present case. (There could also be a problem where the written consent was given first and there was a great lapse of time before the resolution was passed.)
I do not gain particular assistance from Ascot, which concerned a different statutory provision, s 440D(1) of the Law, nor from Anderson, in which the Tribunal was not called upon to address the present issue.
ASIC relies on certain aspects of the testimony of Mr Gould as to his understanding. I do not find it necessary to discuss the detail of his evidence or the submissions that ASIC has made on the basis of it.
If, contrary to my construction, the appointment took effect on 11 September 2000 and Mr Gould acted as administrator thereafter and before giving his written consent, Mr Gould’s conduct would have been inconsistent with s 448A(1) of the Law. That, however, was not the position. Upon my construction of the documents the appointment was to take effect once Mr Gould accepted office, and it is quite plain from his letter of 27 September 2000 that he regarded himself as not appointed until he consented.
In the result, for the reasons that I have given above, I agree with the Tribunal that Contention 2.1 was not made out. Question (1) in the Notice of Contention should be answered as follows:
(a)not necessary to answer;
(b)no.
Consideration of ASIC’s Notice of Contention in so far as it relates to contention 2.11 and Question (2) in the Notice of Contention
Section 445F(1) empowered Mr Gould as DOCA administrator to convene a meeting of Trinbay’s creditors at any time. I set out s 445C of the Law at [340] above. ASIC’s case was that Mr Gould was obliged to exercise the power given him by s 445F(1)(a) to convene a meeting of Trinbay’s creditors in order that they might pass a resolution terminating the DOCA for the purposes of s 445C(b). ASIC contended that cl 3 of the prescribed provisions, which was included in the DOCA by cl 8.1, obliged him to do so. Certainly on its face cl 3 of the prescribed provisions obliged Mr Gould to summon a meeting of creditors if he determined that it was no longer practicable or desirable either to continue on the business of the company or to implement the DOCA.
I agree with ASIC that Mr Gould’s letter dated 2 April 2003 to the ATO advising that there was no prospect of recovery of any funds and that the ATO should note in its records that no further returns would be lodged by Trinbay as the administration had been concluded and it was likely that Trinbay would be deregistered, showed that at that time Mr Gould had determined that it was no longer practicable or desirable either to continue to carry on Trinbay’s business or to implement the DOCA.
Notwithstanding the apparent operation in these circumstances of cl 3 of the prescribed provisions, however, it was not necessary for Mr Gould to summon the meeting of creditors so that they could resolve to terminate the DOCA if the DOCA had already terminated. To summon a meeting of creditors in that situation would be futile.
Clause 18.1 of the DOCA provided that the DOCA was to terminate on the “Termination Date”. That expression was defined in cl 1.1 of the DOCA as the date on which was the first of the following occurred:
(a)the passing of a resolution terminating the DOCA at a meeting of creditors convened under s 445F of the Law;
(b)the making by the Court of an order under s 445D of the Law;
(c)the day 30 days after the date when Mr Gould as administrator makes the Final Distribution.
The expression “Final Distribution” was defined in the same clause to mean, relevantly, the first and final dividend payment made under cl 9.1 of the DOCA.
Apparently there could not be a “Final Distribution” because there was no property available to pay it.
I agree with ASIC that, at least so far as the Appeal Book reveals, there was no evidence before the Tribunal from which it could have inferred that there was a Final Distribution. In its reasons, the Tribunal does not refer to any evidence that a Final Distribution was made for the purposes of cl 9.1 of the DOCA. At [198] of its reasons, the Tribunal seems to have accepted that the bare theoretical alternative that the DOCA may have terminated 30 days after the making of a Final Distribution was sufficient in itself to eliminate the obligation on Mr Gould to summon a meeting of creditors. I disagree. Clause 3 of the prescribed provisions made it mandatory for Mr Gould to summon a meeting of creditors for the purpose of their passing a resolution under s 445C(b) of the Law, and the onus rested on Mr Gould to prove that the DOCA had already terminated. He did not discharge that onus.
Question (2) in the Notice of Contention should be answered “yes”.
In his submissions, counsel for Mr Gould argues that ASIC has not raised a question of law in respect of Contention 2.11. Whether Question (2) in the Notice of Contention is a question of law, a question of fact or a mixed question of fact and law can be left for the time being – see [372] ff below.
Consideration of ASIC’s Notice of Contention so far as it relates to Contentions 6.6 and 6.7A and Question (3) in the Notice of Contention
The word “false” in s 1308(4)(a) is contrasted with the word “misleading” in that provision. I think that the word “false” in the provision means simply not true to, or in conformity with, the facts. The severity of the provision so understood is ameliorated by the condition of the person’s not “having taken reasonable steps to ensure that the statement was not false …”.
There are decided cases on the expression “false or misleading” to which I was not referred: see, for example, Versteeg v R (1988) 14 ACLR 1 at 17; Construction Forestry, Mining and Energy Union v Hadgkiss (2007) 248 ALR 169 at [18], [29] – [35]; Bidald Consulting Pty Ltd v Miles Special Builders Pty Ltd (2005) 226 ALR 510 at [147] – [152]; Re Robert Kent Black, Magistrate of the Magistrates Court at Perth; Ex parte Commonwealth Director of Public Prosecutions [2009] WASC 41 at [55] - [59]. These cases show that whether “false” means intentionally false or merely false as a matter of objective fact depends on context. In my opinion, the presence in s 1308(4) of the words “without having taken reasonable steps to ensure that the statement was not false or misleading” shows that the word “false” in that subsection means simply false as a matter of objective fact. It would not be sensible for it to mean “intentionally false” in the light of the presence of those words.
I agree with counsel for Mr Gould that even still it is necessary to take into account the context and readership. Counsel gives the illustration of a date appearing under a signature on a Form 524 being “19/8/1008” rather than “19/8/2008”. Does the document convey a representation that it was signed one thousand years ago? I think not. The mistake would be obvious to the whole world. It would not be obvious to the whole world what statement was in fact being made, but it would be obvious to the whole world that it was not that the document was signed on 19 August 1008.
The representation in the present case that the “estimated amount available for unsecured creditors” was $1,246,306 is of a different kind. It would not be obvious to the whole world that that representation was false. It may be that a reader would think that that statement was true but that the statement that the claims of five creditors totalled $1,246,306 was false, or that neither statement was false.
In my opinion the Forms 524 contained a statement that was false in a material particular, namely, that the estimated amount available for unsecured creditors was $1,246,306. A statement in a Form 524 of the estimated amount available for unsecured creditors was a material statement and the falsity in this case ($1,246,306 rather than “nil”) was also material.
The Tribunal erred in failing to consider whether the Forms 524 contained information that was “false” in a material particular and whether Mr Gould had failed to take reasonable steps to ensure that it was not false.
For the above reasons, Question 3(a) in the Notice of Contention should be answered “yes”.
As counsel for Mr Gould observed, ASIC made no submission relevant to Question 3(b) in the Notice of Contention, that is to say, the question whether the Tribunal erred in finding that the Forms 524 were not misleading. Therefore, Question 3(b) should be answered: “Inappropriate to answer”.
CONCLUSION
As indicated above, at an early stage of the Appeal Proceeding I raised the question whether some of the purported questions of law stated in the FASNA were questions of law on which Mr Gould was appealing to this Court: see s 44(1) of the AAT Act. Counsel for Mr Gould raised the same issue in respect of the Notice of Contention.
The issue referred to goes to the jurisdiction of the Court. The parties seem to have assumed that the bringing of the Review Proceeding necessarily overcame the difficulty.
While I have indicated the answers which I am disposed to give to the questions raised in the FASNA if those questions do, indeed, fall within s 44(1) of the AAT Act, I propose to give the parties an opportunity to consider whether they do and to make submissions on the matter. However, the possibility of framing amended questions should also not be overlooked.
At this stage, therefore, I will simply publish my reasons for judgment and list the proceeding for a date for directions relating to the hearing of any submissions to be made. On any view, it seems that the matter must be remitted to the Tribunal. The question of costs also remains to be dealt with.

I certify that the preceding three hundred and seventy-five (375) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.
Associate:
Dated: 12 May 2009
In both proceedings (NSD 1590 of 2008 and NSD 1778 of 2008):

Counsel for the Applicant: Mr R Dubler SC

Solicitor for the Applicant: Henry Davis York

Counsel for the Second Respondent: Mr G McNally SC

Solicitor for the Second Respondent: Kim Turner of the Australian Securities and Investments Commission

Date of Hearing: 10, 11 December 2008

Date of Judgment: 12 May 2009

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1590 of 2008

BETWEEN:	VANDA RUSSELL GOULD Applicant
AND:	COMPANIES AUDITORS AND LIQUIDATORS DISCIPLINARY BOARD First Respondent AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Second Respondent
JUDGE:	LINDGREN J
DATE OF ORDER:	12 MAY 2009
WHERE MADE:	SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY		NSD 1778 of 2008
BETWEEN:	VANDA RUSSELL GOULD Applicant
AND:	ADMINISTRATIVE APPEALS TRIBUNAL First Respondent AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Second Respondent COMPANIES AUDITORS AND LIQUIDATORS DISCIPLINARY BOARD Third Respondent
JUDGE:	LINDGREN J
DATE:	12 MAY 2009
PLACE:	SYDNEY

Para
Introduction	[1]
Reasons for Decision of the AAT	[26]
The Three Companies	[28]
Consideration A. Failure to cap remuneration – Questions associated with Contentions 2.6, 4.4 and 6.3 B. Non-compliance with s 450E(2) by failure to state “(subject to deed of company arrangement)” – Questions associated with Contentions 2.9 and 4.6 C. Payment of two late lodgement fees from Popwing’s assets as expenses of the liquidation – Questions associated with Contention 6.5 D. Contravention of s 1308(4) of the Law in respect of Forms 524 – Question associated with Contentions 6.6 and 6.7A E. Whether the AAT had jurisdiction to entertain Contentions 2.1, 6.5, 6.6 and 6.7A or was otherwise not at liberty to entertain them F. ASIC’S Notice of Contention relating to Contentions 2.1, 2.11, 6.6 and 6.7A	[41] [126] [160] [213] [259] [315]
Conclusion	[372]

Counsel for the Applicant:	Mr R Dubler SC
Solicitor for the Applicant:	Henry Davis York
Counsel for the Second Respondent:	Mr G McNally SC
Solicitor for the Second Respondent:	Kim Turner of the Australian Securities and Investments Commission

Date of Hearing:	10, 11 December 2008
Date of Judgment:	12 May 2009