Liu and Australian Securities and Investments Commission
[2013] AATA 864
•3 December 2013
[2013] AATA 864
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2013/0608
Re
Eugene Liu
APPLICANT
And
Australian Securities and Investments Commission
RESPONDENT
DECISION
Tribunal Ms J Redfern, Senior Member
Date 3 December 2013 Place Sydney The application for review is reinstated.
.......[sgd].................................................................
Ms J Redfern, Senior Member
CATCHWORDS
PRACTICE AND PROCEDURE – Reinstatement – dismissal for failure to comply with a direction – applicant no longer represented – whether there was an error – application granted
LEGISLATION
Administrative Appeals Tribunal Act 1975: s 2A; 42A(5), (10)
CASES
Goldie v Minister for Immigration and Multicultural and Indigenous Affairs (2002) 2 ALD 652
Re-Schramm and Repatriation Commission (1998) 54 ALD 501
Re White and Secretary, Department of Families, Community Services and Indigenous Affairs (2007) 97 ALD 207SECONDARY MATERIALS
Oxford English Dictionary, Online edition.
REASONS FOR DECISION
Ms J Redfern, Senior Member
3 December 2013
Background
Mr Eugene Liu seeks to reinstate proceedings dismissed on 18 October 2013 pursuant to section 42A (5) of the Administrative Appeals Tribunal Act 1976 (the AAT Act).
The proceeding dismissed was an application by Mr Liu for a review of the decision by a delegate of the Australian Securities and Investments Commission (ASIC) that he be permanently prohibited from providing financial services.
The decision was made on 7 February 2013 and relates to Mr Liu’s role in connection with funds administered by Astarra Asset Management Ltd and Trio Capital Limited prior to the collapse of those companies in late 2009/early 2010.
On 11 February 2013, Mr Liu sought a stay and confidentiality orders in respect of the decision. These applications were refused by the Tribunal on 6 March 2013.
On 4 June 2013, the Tribunal made directions about the preparation for hearing and directed that the matter be listed for hearing in the week commencing 11 November 2013. The Tribunal also directed that Mr Liu file and serve his evidence and a Statement of Facts, Issues and Contentions by 27 September 2013.
On 31 July 2013, the lawyers retained to act for Mr Liu in the proceedings, Kennedys Lawyers, ceased acting. In a letter of 31 July 2013, Kennedys notified the Tribunal, and representatives of ASIC, advising of Mr Liu’s telephone number and his email address for service.
Mr Liu did not comply with the directions of the Tribunal and, on 30 September 2013, notice was sent to Mr Liu advising him his matter was listed for a non-compliance directions hearing on 3 October 2013. The notification was sent to Mr Liu at the e-mail address provided by Kennedys.
Mr Liu did not appear at the directions hearing on 3 October 2013 nor did he communicate with the Tribunal on or before this date. At the directions hearing, the Tribunal attempted unsuccessfully to telephone Mr Liu.
On 3 October 2013, the Tribunal said a letter to Mr Liu in the following terms:
I am writing to you about the direction made by the Tribunal on 5 June 2013 which required you to:-
lodge with the Tribunal and serve on the Respondent any further evidence on which you intend to rely and a Statement of Facts and Contentions by 27 September 2013.
You did not comply with that direction and therefore the Tribunal therefore listed this matter for a non-compliance directions hearing at 9:15am on 3 October 2013.
A listing notice and cover letter notifying you of this non-compliance directions hearing was emailed to you at [email protected] and posted to the Sydney address you gave the Tribunal on your application for review lodged with the Tribunal on 11 February 2013.
You did not appear at the non-compliance directions hearing, nor notify the Registry that you were unable to attend.
Unless the Tribunal receives a satisfactory written explanation by 17 October 2013 outlining the reason you failed to: (i) comply with the directions made by the Tribunal on 5 June 2013 (ii) attend the non-compliance directions hearing on 3 October 2013, the Tribunal will move to dismiss your application under section 42A(5) of the Administrative Appeals Tribunal Act 1975 (Cth). Section 42A(5) provides:
(5) If an applicant for a review of a decision fails within a reasonable time:
(a) to proceed with the application; or
(b) to comply with a direction by the Tribunal in relation to the application;
the Tribunal may dismiss the application without proceeding to review the decision.
A copy of this letter has been emailed to you at [email protected] and posted to 3 Carriage Hill Drive, Long Valley, New Jersey 07843 USA where we understand you are currently residing.
If you need any further information or assistance, please contact the Tribunal on the telephone number below. If you are calling from outside a capital city, you can call the Tribunal on 1300 366 700 for the cost of a local call.
The letter was sent to the email address for Mr Liu provided by Kennedys and was posted to his address in New Jersey, USA.
Mr Liu did not respond to this letter, although asserts in his submissions he telephoned the Tribunal on 17 October 2013 to enquire about his case. Mr Liu states that he was told the matter was listed for hearing on 20 November 2013 and he was not advised about the letter of 3 October 2013. There are no records of such a discussion.
On 18 October 2013, the Tribunal dismissed Mr Liu's proceedings pursuant to s 42A(5) of the AAT Act for failure to comply with a direction of the Tribunal. A copy of the dismissal order was sent to Mr Liu at three contact addresses – email, a postal address in Australia and a postal address in New Jersey, USA.
Mr Liu resides in the USA and it is common ground that he cannot return to Australia in the foreseeable future as he has been refused a visa.
APPLICATION FOR REINSTATEMENT
When an application is dismissed by the Tribunal under s 42A(5) of the AAT Act, an applicant may apply for the application to be reinstated under s42A(10) if it appears to the Tribunal that the application has been dismissed in “error”. Error is not defined but it is clear that it is not confined to an administrative error or fault by a Member or employee of the Tribunal. According to the plurality (Wilcox and Downes JJ) in the Full Federal Court decision of Goldie v Minister for Immigration and Multicultural and Indigenous Affairs (2002) 2 ALD 652, s 42A(10) of the AAT Act is not limited to administrative error. The following is apposite [at 29]:
We do not think it is necessary, in order to enliven the Tribunal's power under s 42A (10), that the Tribunal, or a member or employee of the Tribunal, should have been at fault in relation to the dismissal. The dismissal may have lain elsewhere, provided it induced the error. For example, because of a mistake as to his or her instructions, a solicitor or other representative of a party but have wrongly consented to a dismissed order or filed a notice of discontinuance. No fault would attach to the Tribunal; but, if the solicitor’s mistaking induced the dismissal of the action, it could properly be said the application has been “dismissed in error”.
Once s 42A(10) of the AAT Act is enlivened because there is an error, the Tribunal has discretion to reinstate the application. As noted by Pearce in Administrative Appeals Tribunal (3rd Edition) it is necessary for the Tribunal to be satisfied that reinstatement is appropriate in the circumstances of the particular case (Re-Schramm and Repatriation Commission (1998) 54 ALD 501). The factors that should govern the exercise of the discretion include the need to have regard to the efficiency of the Tribunal's case management; fairness to the parties; and the strength of the applicant's case (Re White and Secretary, Department of Families, Community Services and Indigenous Affairs (2007) 97 ALD 207).
In this case, the error identified by Mr Liu is the dismissal of his application for failure to comply with directions in circumstances where he asserts he was not on notice of the intention of the Tribunal to dismiss the application. According to Mr Liu, the email account provided by Kennedys to the Tribunal was active but he did not regularly access it.
It is not in dispute that Mr Liu was aware of the directions made on 4 June 2013; that he did not comply with those directions; that he was sent a notice of the non-compliance directions hearing on 30 September 2013 by email but did not read the email at that time and did not appear at the directions hearing or communicate with the Tribunal on or before 3 October 2013. It was also common ground that Mr Liu was sent a notice by email on 3 October 2013 foreshadowing that the Tribunal may dismiss his application if he did not provide an explanation for non-compliance but he did not read the email at that time until he was subsequently notified of the dismissal of the application after 24 October 2013. Mr Liu contacted the Tribunal by telephone and then subsequently by email on 25 October 2013.
Mr Liu submitted that the discretion of the Tribunal to reinstate his application for review was enlivened because there has been an error in its dismissal within the meaning of s 42A(1) of the AAT Act. The error was that Mr Liu was not been afforded procedural fairness prior to the dismissal because he was not aware his application would be dismissed. While Mr Liu conceded he did not review the email address provided regularly and was at fault, he should not be denied the opportunity to defend his reputation through pursuing a review of the delegate’s decision. Once he became aware of the dismissal, he made all efforts to have the matter reinstated. Mr Liu submitted he had not intended to abandon his claim and he should be given the opportunity to have the decision reviewed by an independent party. He denies the findings by the delegate of dishonest conduct.
Mr Liu produced a draft enforceable undertaking sent to him by ASIC in July 2012, which contained a provision that Mr Liu be banned for five years. According to Mr Liu, this shows that the decision of the delegate to impose a permanent banning was excessive and he therefore has a good case. Mr Liu further submitted his application could proceed on the basis of the documents already provided to the Tribunal. He would make submissions about the credibility of Mr Shawn Richard, who was a critical witness in the case, and the Tribunal could form a view based on his submissions and review of the documentary evidence. It would be unfair to him not to reinstate his case and any unfairness to ASIC could be dealt with by directions of the Tribunal. There would be a short delay in the conduct of the proceedings but he did not believe the delay would unduly prejudice ASIC.
ASIC submitted that the events leading to the dismissal, which are not in dispute, do not disclose an “error” within the meaning of s 42A(10) of the AAT Act. The decision made by the Tribunal to dismiss Mr Liu’s application for non-compliance was properly made and within power. While ASIC accepted that the definition of “error” for the purposes of s 42A(10) is broad, Mr Liu could not rely on the absence of procedural fairness in the circumstances of this case. Mr Liu was given the opportunity to be heard and to provide an explanation about non-compliance but he failed to take up the opportunity. The decision in Goldie is not authority for such an expansive interpretation of “error” and it would be impermissibly wide for the Tribunal to characterise neglect by Mr Liu as an “error” within the meaning of s 42A(10). Mr Liu chose not to avail himself of the opportunity by failing to read his emails and failing to take proactive steps in the proceedings. Having regard to the agreed facts, the procedural steps taken which led to the dismissal of Mr Liu application do not reveal any error.
ASIC submitted, even if I was not persuaded by this argument, the Tribunal should nonetheless refuse to exercise its discretion in favour of Mr Liu in the circumstances of this case. Even though the legislation should be viewed beneficially, it was important to look at the circumstances leading to the dismissal. Mr Liu was a “poor candidate” for the exercise of the discretion. He knew about the directions made on 4 June 2013 and, in particular, knew that the matter was to be listed for hearing in November 2013. He did not take proactive steps to advance his application or to advise the Tribunal to contact him at a different email address once he knew his solicitors were no longer acting. As already found by the Tribunal in refusing Mr Liu’s stay application, his case was not sufficiently strong to warrant a stay. The Tribunal should have regard to efficient case management and, having regard to Mr Liu’s delay, the lack of a plan about how the case would proceed and his inability to return to Australia in the foreseeable future as he has been refused a visa, the Tribunal could not be confident Mr Liu would properly prosecute his application. Even if the Tribunal made directions about how the application is to proceed in the event it is reinstated, Mr Liu has not properly articulated how the case should proceed. Mr Liu bears the onus of establishing that the discretion should be exercised in his favour.
A significant issue raised by ASIC was that it would suffer prejudice due to the delay. Mr Shawn Richard was an important witness in the ASIC case. He was currently serving time in prison in relation to the collapse of the companies and it was likely that he would be deported after his release from prison in January 2014. The Tribunal could not make any directions to alleviate this prejudice as if Mr Liu made an attack on Mr Richard’s credit, ASIC would be unable to obtain further evidence from Mr Richard to address those issues. Furthermore, the delay in the proceedings and the need to continually allocate resources to the application was an impost on ASIC and thereby the public purse.
CONSIDERATION
Before dismissing an application under s 42A(5) of the AAT Act it is critical that the applicant be forewarned of the likelihood of dismissal and be given an opportunity to provide an explanation for non-compliance. Dismissal is a last resort (Guse v Comcare (1997) 49 ALD 298). Mr Liu was given forewarning of this dismissal by notice dated 3 October 2013 but I am satisfied Mr Liu did not read and was not aware of the notice, albeit through his admitted neglect. While Mr Liu must have contemplated that failure to communicate with the Tribunal from 30 July 2013 would be detrimental to his application, I accept Mr Liu was not aware of the possibility his application would be dismissed at this time. This is evidenced by Mr Liu’s actions soon after being notified of the dismissal, from which I infer Mr Liu was taken by surprise by the dismissal and did not intend to abandon his application. Mr Liu has made considerable efforts to file submissions about his application for reinstatement soon after notification of the dismissal and to participate in the hearing of the application.
The decision to dismiss the application was based on Mr Liu’s failure to comply with directions and his subsequent failure, on two occasions, to explain the reasons for non-compliance. I accept ASIC’s submission that the dismissal was within power and, insofar as there was justification for the dismissal, there was no error. What was in error was the assumption Mr Liu was aware of the various notices and had deliberately ignored those notices. This was the inference drawn from Mr Liu's failure to respond to any of the notices or communicate with the Tribunal before 18 October 2013. Mr Liu was at fault in failing to review the email address provided by his lawyers for service, failing to notify of his new email address and failing to seek an extension of time to comply with the Tribunal directions. This is not in dispute.
The question is, does Mr Liu’s neglect preclude a finding of error. In my view it does not. As noted in Goldie, the concept of error is broad. According to the Oxford English Dictionary (Online Edition) error includes “mistake” and “miscarriage”. This covers the present circumstances. I do not think this interpretation is impermissibly wide, particularly given that any application for reinstatement must also satisfy the Tribunal's discretion.
While I accept Mr Liu’s delay and non-compliance with previous directions has caused inconvenience and cost to both ASIC and the Tribunal, I also accept it would be unfair to him to deny him a reasonable opportunity to contest the decision of the ASIC delegate. While the Tribunal previously held Mr Liu’s application was not strong enough to warrant a stay, a review of the delegate’s decision and Mr Liu’s submissions at the ASIC hearing suggests he has an arguable case. Mr Liu’s delay has not been excessive and he has undertaken to comply with any further Tribunal directions and proactively proceeded with his application. ASIC submitted this should be viewed with caution given the history of the matter. ASIC also asserts it will be prejudiced by the delay because it is unlikely Mr Richard will be available for cross-examination if the hearing is after January 2014. Mr Liu accepted this and stated he would not take issue with this and would make submissions about Mr Richard’s creditability based on documentary evidence. ASIC submitted this could not cure the prejudice because Mr Liu has never particularised these matters or his case and ASIC would be disadvantaged by being unable to obtain further evidence of clarification from Mr Richard.
If Mr Liu had made representations at the non-compliance directions hearing on 3 October 2013 and sought an extension of the timetable, no doubt ASIC would have opposed the application because any extension would have necessitated vacating the November 2013 hearing and relisting the matter sometime in early 2014. ASIC would have raised the same issue of prejudice as is now being raised. The Tribunal would have made directions under s 33 of the AAT Act to address the prejudice. The same is true of the proceedings if they are reinstated.
According to s 2A of the AAT Act, “the Tribunal must pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick”. The Tribunal has broad discretion in relation to its procedure under s 33 of the AAT Act. In making directions the Tribunal is guided by ss 33(1)(b), which provides that “the proceeding must be conducted with as little formality and technicality, and with as much expedition as the requirements of this Act and every other relevant enactment and a proper consideration of the matters before the Tribunal permits”. The Tribunal is usually able to address issues of fairness through its directions and, where possible, seek flexible solutions that may not be adopted in the more formal setting of a Court. Relevantly, the Tribunal “is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks appropriate”.
In this case, the perceived prejudice referred to by ASIC may be addressed by directions requiring Mr Liu to file and serve his Statement of Facts, Issues and Contentions, together with particulars of his submissions about the evidence of Mr Richard, by 13 December 2013. This will give ASIC sufficient opportunity to obtain further evidence from Mr Richard if necessary. Directions about the further conduct of the hearing, given Mr Liu is overseas and is unlikely to be allowed to return to Australia, can be made after Mr Liu has filed and served these key documents. If Mr Liu fails to comply with these directions the Tribunal may seek to dismiss the application pursuant to s 42A(5).
Having regard to these matters, I reinstate Mr Liu’s application. I direct Mr Liu to file and serve his Statement of Facts, Issues and Contentions, together with particulars of his submissions about the evidence of Mr Richard, on or before 13 December 2013.
I certify that the preceding 30 (thirty) paragraphs are a true copy of the reasons for the decision herein of Ms J L Redfern, Senior Member ..........[sgd]..............................................................
Associate
Dated 3 December 2013
Date of hearing 21 November 2013 Applicant In person Counsel for the Respondent Mr S Golledge Solicitors for the Respondent Australian Securities and Investment Commission
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