Hongkong Bank of Australia Ltd v Australian Securities Commission
[1992] FCA 376
•10 JUNE 1992
Re: HONGKONG BANK OF AUSTRALIA LIMITED; ANTONINO FRANCESCO TRIMBOLI;
MERCANTILE MUTUAL LIFE INSURANCE CO LIMITED and ROY MOORE
And: AUSTRALIAN SECURITIES COMMISSION; JOHN WILLIAM MURPHY and PETER BERNARD
ALLEN
Nos. V G164 and N G278 of 1992
FED No. 376
Corporations - Administrative
(1992) 10 ACLC 920
fix
(1992) 7 ASCR 724
(1992) 108 ALR 70
(1992) 15 AAR 429
(1992) 27 ALD 257
(1992) 40 FCR 402
COURT
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIAN DISTRICT REGISTRY
GENERAL DIVISION
Lockhart(1), Gummow(1) and O'Connor(1) JJ.
CATCHWORDS
Corporations - authorisation by delegate of Australian Securities Commission to make Court applications for orders under sub-s.597(2) of the Corporations Law - whether such authorisation reviewable under the Administrative Appeals Tribunal Act 1975 ("the AAT Act") - construction of sub-s.597(1) of the Corporations Law.
Administrative Law - Administrative Appeals Tribunal ("the AAT") - whether application may be made under s. 1317B of the Corporations Law and s.25 of the AAT Act for review by AAT of decisions by delegate of the ASC to authorise the making of applications under sub-s.597(2) of the Corporations Law - jurisdiction of AAT.
Australian Securities Commission Act 1989 (Cth) Corporations Law
HEARING
SYDNEY
#DATE 10:6:1992
Counsel and Solicitors for the Mr J.D. Heydon QC,
Applicants in Proceeding NG278 Mr Peter Comans and Mr I.M. Jackman
and of 1992:
Instructed by Mallesons: Stephen Jaques
Counsel and Solicitors for the: Mr F.M. Douglas
QC, Applicants in Proceeding VG164 Mr S.D. Rares and Mr L.V. Gyles
and of 1992
Instructed by: Arthur Robinson and Hedderwicks
Counsel and Solicitors for the Mr G. Johnson
First Respondent in each proceeding:
Instructed by: Margot D. Waters and Peter J Stepek
Counsel and Solicitors for the Mr R.V. Gyles QC
Second Respondents in each Mr L. Glick
proceeding:
Instructed by: Baker and McKenzie
ORDER
IN PROCEEDING NO. V G164 of 1992
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The applicants pay the costs of the respondents.
IN PROCEEDING NO. N G278 of 1992
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The applicants pay the costs of the respondents.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
These are two appeals on questions of law under s.44 of the Administrative Appeals Tribunal Act 1975 ("the AAT Act"). The matter is in the original jurisdiction of the Court, but the Court is constituted as a Full Court, pursuant to sub-s.44(2)(b)(ii) of the AAT Act. The appeals were heard together and present common questions of law. They are brought from a decision of the Administrative Appeals Tribunal ("the AAT") given 11 May 1992.
The applicants before this Court had sought review of a decision made by a delegate of the first respondent, the Australian Securities Commission ("the ASC"), on 2 April 1992. The AAT decided that it had no jurisdiction and that the applications for review therefore should be dismissed.
Sub-section 25(1) of the AAT Act provides:-
"25(1) An enactment may provide that applications may be made to the
Tribunal:
(a) for review of decisions made in the exercise of powers conferred by that enactment; or
(b) for review of decisions made in the exercise of powers conferred, or that may be conferred by another enactment having effect under that enactment."
This requirement for a specific conferral of authority upon the AAT is of particular importance to the outcome of this case.
The case arises in the following way. Until 7 November 1990, Burns Philp Trustee Co Limited ("Burns Philp") was trustee of six unit trusts known as the Estate Mortgage Trusts. On 7 November 1990, the Supreme Court of New South Wales ordered that Burns Philp be removed as trustee and appointed Messrs Murphy and Allen, the second respondents before this Court ("the new trustees") as trustees of each of those trusts. They remain in office. On 3 December 1990, the Supreme Court of New South Wales ordered that Burns Philp be wound up. It is now known as BPTC Limited.
There is a number of proceedings presently before the Supreme Court of Victoria instituted by the new trustees against the corporate applicants in this Court, Hongkong Bank of Australia Limited ("Hongkong Bank") and Mercantile Mutual Life Insurance Co Limited ("Mercantile Mutual"). On 2 April 1992, by instrument under the hand of its Regional Commissioner for the State of New South Wales, Mr Michael Braham, the ASC authorised the new trustees to make application to this Court or to the Supreme Courts of New South Wales or Victoria for an order pursuant to s.597 of the Corporations Law "in relation to" Burns Philp. It was the decision to issue this authorisation that was the subject of the applications for review in the AAT.
Pursuant to the authorisation, the new trustees made application to the Supreme Court of New South Wales, and, on 21 April 1992, the Supreme Court, constituted by a Registrar, made four orders. These were entered on the same day. The orders provide for the examination of Mr Trimboli and Mr Moore, the second applicants respectively in each appeal to this Court, and for the production of records by them and by the corporate applicants, Hongkong Bank and Mercantile Mutual. The Registrar fixed 11 June 1992 as the date for the examinations. Before the AAT it was accepted that the purpose of the orders obtained from the Supreme Court of New South Wales was to assist the new trustee to refine the causes of action in the proceedings before the Supreme Court of Victoria and to obtain information which might assist them in prosecuting those proceedings.
On 29 May 1992, a Judge of the Supreme Court of New South Wales, McLelland J., delivered judgment upon various applications arising out of the orders made 21 April 1992. His Honour refused the application by National Mutual and Mr Moore to stay those orders pending the outcome of the proceedings in this Court.
On 27 April 1992, the solicitors for Hongkong Bank and Mr Trimboli had made an application to the AAT for review of the decision made on 2 April 1992 to give the authorisation we have described to the new trustees. The solicitors for Mercantile Mutual and Mr Moore made an application to like effect on 1 May 1992. The applications were dealt with as matters of urgency and the AAT delivered its decision, as we have indicated, on 11 May 1992. It should be noted that the orders of the Supreme Court of New South Wales of 21 April 1992 antedated both applications to the AAT.
The AAT dismissed both applications on the footing that it had no jurisdiction. Detailed reasons were given which encompassed both applications. The Tribunal concluded that the decision of 2 April 1992 was no more than a step of an administrative nature and not of itself "determinative and final", so that it did not fall within the definition of "decision" in sub-s.3(3) of the AAT Act. This subsection provides that a reference in the AAT Act to a decision includes, inter alia, a reference to various matters including making, suspending, revoking or refusing to make an order or determination. The Tribunal went on to conclude that, had there been a reviewable decision, the present applicants would have had sufficient standing for the purposes of s.27 of the AAT Act. Sub-section 27(1) confers standing upon any person or persons "whose interests are affected by the decision".
Before this Court, the applicants support the second conclusion by the AAT but dispute the first, whilst the respondents take the opposite position. Further, the second respondents, the new trustees, contend that the proceedings in this Court are futile because the authorisation, so far as regards the interests of the applicants, had been acted upon by the seeking and obtaining of the Supreme Court orders on 21 April 1992.
However, there is a threshold question concerning the jurisdiction of the AAT. It is whether the decision in question is one in respect of which an enactment provides for an application for review by the AAT, within the meaning of s.25 of the AAT Act.
It is necessary to turn in some detail to certain of the relevant statutory provisions of the Corporations Law and the Australian Securities Commission Act 1989 ("the ASC Act"). However, we should first set out in full the terms of the authorisation of 2 April 1992. The document is headed "Instrument of Authorisation" and states:-
"WHEREAS by instrument of Delegation made under Common Seal by the Australian Securities Commission pursuant to section 102 of the ASC Law made 21 March, 1991 the Australian Securities Commission has delegated to the Regional Commissioner for the State of New South Wales various powers and functions including those specified in section 597 of the Corporations Law.
The Australian Securities Commission, pursuant to the provisions of subsection 1 of section 597 of the Corporations Law, hereby authorises John William Murphy and Peter Bernard Allen to make application to the Supreme Court of New South Wales or the Supreme Court of Victoria or the Federal Court of Australia for an order pursuant to the provisions of section 597 of the Corporations Law in relation to the Burns Philp Company Ltd (in liquidation)."
It will be observed that, on its face, the instrument identifies the source of the authority for the authorisation as sub-s.597(1) of the Corporations Law. Section 597 appears in Chapter 5 which is headed "External Administration". The subject dealt with in Chapter 5 includes both voluntary winding up and winding up by court order. No doubt, in practice, the principal use of s.597 may be in relation to insolvent administrations, but this is not necessarily the case.
Section 597, so far as is relevant, provides as follows:-
"597(1) In this section, a reference, in relation to a corporation, to a prescribed person, is a reference to an official manager, liquidator or provisional liquidator of the corporation or to any other person authorised by the Commission to make applications under this section or to` make an application under this section in relation to that corporation.
(2) Where it appears to the Commission or to a porescribed person that:
(a) a person who has taken part or been concerned in the promotion, formation, management, administration or winding up of, or has otherwise taken part or been concerned in affairs of, a corporation has been, or may have been, guilty of fraud, negligence, default, breach of trust, breach of duty or other misconduct in relation to that corporation; or
(b) a person may be capable of giving information in relation to the promotion, formation, management, administration or winding up of, or otherwise in relation to affairs of, a corporation;
the Commission or prescribed person may apply to the Court for an order under this section in relation to the person.
(3) Where an application is made under subsection (2) in relation to a person, the Court may order that the person attend before the Court on a day and at a time to be fixed by the Court to be examined on oath on any matters relating to the promotion, formation, management, administration or winding up of, or otherwise relating to affairs of, the corporation concerned.
(4) ...
(5) ...
(6) ...
(7) ...
(8) A person attending before the Court for examination pursuant to an order made under subsection (3) shall not refuse or fail to answer a question that he or she is directed by the Court to answer.
(9) A person attending before the Court for examination pursuant to an order made under subsection (3), if directed by the Court to produce any books in his or her possession or under his or her control relevant to the matters on which he or she is to be, or is being, examined, shall not refuse or fail to comply with the direction.
..."
Sections 1317A-1317C of the Corporations Law contain provisions of the kind referred to in s.25 of the AAT Act. Applications may be made to the AAT for review of decisions made under "this Law" (an expression defined in the dictionary in s.9 so as to incorporate ss.8 and 8(A)) by the Minister, "the Commission" or the Companies Auditors and Liquidators Disciplinary Board (sub-s.1317B(1)). However, certain decisions otherwise within the class described in s.1317B are excluded by s.1317C. Significant for present purposes is s.1317C(f). This provides that s.1317B does not apply in relation to a decision by the Commission to make an application under sub-s.597(2).
It should be noted that, before the AAT, there was no application for review of any decision of the new trustees to act upon their authorisation as they did, by applying to the Supreme Court of New South Wales. But rather, review was sought of an earlier decision, namely the issue of the authorisation.
Before this Court, it was contended that, in respect of that decision, the relevant enactment for the purposes of s.25 of the AAT Act, so as to attract the authority of the AAT, was to be found in sub-s.597(1) of the Corporations Law.
Before dealing with that question, it is appropriate first to turn to the position of the ASC. The expression "the Commission", when used in provisions such as s.597 of the Corporations Law means the ASC. (See s.9.) The ASC is established as a body corporate by ss.7 and 8 of the ASC Act. The membership of the ASC is provided for by s.9. The members are appointed by the Governor-General on the nomination of the Minister. They could appear to be officers of the Commonwealth for the purposes of s.75(v) of the Constitution; see Re Cram; Ex parte N.S.W. Colliery Proprietors' Association Limited (1987) 163 CLR 117; Bond v. Sulan (1990) 26 FCR 580 at 584-5.
Section 11 of the ASC Act is an important provision. So far as presently relevant, it provides:-
"11(1) The Commission has such functions and powers as are conferred on it by or under the following:
(a) the Corporations Act 1989;
(b) the Corporations Law of the Capital Territory;
(c) this Act.
...
(4) The Commission has power to do whatever is necessary for or in connection with, or reasonably incidental to, the performance of its functions."
Section 244 of the ASC Act provides for review by the AAT of certain decisions by the ASC under Division 8 of Part 3 of the ASC Act. Section 11 is in Part 2 of the ASC Act and thus outside the scope of s.244.
Sub-section 11(1) of the ASC Act gives to the ASC the functions and powers conferred upon it by or under the other legislation which is there identified. In conformity with this provision, s.66 of each of the Corporations Acts of the participating legislatures states that the ASC has the functions and powers conferred or expressed to be conferred on it under a "National Scheme Law" of that jurisdiction. The term "National Scheme Law" is defined in sub-s.60 of the relevant statutes so as to include the Corporations Law of each jurisdiction.
The result is that sub-s.597(2) of the Corporations Law, as we have indicated, relevantly confers a function or power upon the ASC within the meaning of sub-s.11(1) of the ASC Act, but is sub-s.597(1) a law of like character? That is a vital question for the disposition of the present appeals. The central provision in s.597 is found in sub-appeals s.(2). It provides for applications to be made for orders in relation to certain persons. The persons are those described in paras (a) and (b) of sub-s.597(2). The ASC may make the application itself. The legislation contains various provisions enabling the ASC to act through delegates; but the applications before the AAT and therefore the appeals to this Court on questions of law, did not raise any issue as to the delegation to the Regional Commissioner, Mr Michael Braham, which was recited in the Instrument of Authorisation.
Sub-section 597(2) also confers the standing to apply for an order under the section upon a "prescribed person". No further content is given that expression by sub-s.(2) itself. The class of persons falling within that description is identified in sub-s.(1). It is there stated that a reference in s.597 in relation to a corporation, to a "prescribed person", is a reference to persons answering one or more of the descriptions which are given. They are:-
(i) An official manager
(ii) A liquidator or provisional liquidator of the corporation; and
(iii) Any other person authorised by the Commission
(a) to make applications under s.597 or;
(b) to make an application under s.597 in relation to that corporation.
It will be apparent that an authority in category (iii)(b) is narrower in scope than that in category (iii)(a).
The opening words of sub-s.597(1) ("In this section, a reference ... to a prescribed person, is ...") indicate its function as one of explaining the sense in which a term is employed in the sub-sections which follow. The sub-section is not expressed as a dispositive provision creating rights or liabilities or reposing powers or functions. Legal rights and duties in relation to the examination of persons concerned with corporations are created in plain terms in the balance of s.597. Sub-section 597(1) specifies the membership of a class in which, together with the ASC, is reposed the power or function of making certain Court applications. Membership of the class includes those "authorised" to a certain effect by the ASC. It is consistent with this explanatory or definitional character of sub-s.597(1) to treat the phrase "authorised by the Commission" as a descriptive of persons who have attained that state or condition by the exercise of a function or power of the ASC which has a legislative source outside the sub-section.
Sub-section 11(4) of the ASC Act has been suggested as such a source, it being reasonably incidental to the performance of the functions of the Commission conferred by a combination of sub-s.11(1) of the ASC Act and sub-s.597(2) of the Corporations Act for the Commission to authorise persons to make applications under s.597 or to do so in relation to a particular corporation. As mentioned earlier, the ASC is established by the ASC Act not the Corporations Law, and it would be expected that the ASC Act would provide at least the primary source of its powers and functions. It is not necessary for the purpose of the present appeals to determine whether this view of sub-s.11(4) is correct.
It should also be noted that on its face the Instrument of Authorisation states a reliance upon sub-s.597(1). No other provision is referred to. A question thus may arise of the kind discussed in Australian Broadcasting Tribunal v. Saatchi and Saatchi Compton (Vic) Pty Ltd (1985) 10 FCR 1, and Brown v. West (1990) 169 CLR 195 at 203. The immediate point is that a decision based upon sub-s.211(4) of the ASC Act would not attract the review provisions of the AAT Act. We have already referred to the limited nature of such review made in s.244 of the ASC Act.
It is unnecessary to deal with the further three contentions that, in any event, the AAT lacked jurisdiction for want of a "a decision", that the present applicants, had there been a "decision", would not have had the necessary standing under s.27 of the AAT Act, and that in any event, the applications to this Court are futile.
The applications should be dismissed with costs.
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