Mackay Permanent Building Society Limited and Capricornia Credit Union Limited and Australian Securities and Investments Commission and Anor

[2005] AATA 574

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 574

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          Q2005/154, 196

GENERAL ADMINISTRATIVE  DIVISION

)

Re

MACKAY PERMANENT BUILDING SOCIETY LIMITED and CAPRICORNIA CREDIT UNION LIMITED

  Applicants

And

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Respondent

And           CREDIT UNION SERVICES                  

CORPORATION AUSTRALIA LIMITED

Party Joined  

DECISION and ORDERS

Tribunal Deputy President Don Muller

Date              16 June 2005

PlaceBrisbane

Decision

The Tribunal Decides and Orders that:  

1.  These matters be heard together.
2. The Tribunal has jurisdiction to review the decisions the subject of these applications.
3.  Credit Union Services Corporation Australia Limited is joined as a party to these proceedings.
4.  Until further order, the publication of folios 23 to 51 inclusive in T4 of the section 37 statement lodged with the Tribunal in Q2005/154 be prohibited to all persons other than the parties to these proceedings and their legal representatives, and other than the members and staff of the Tribunal.

SIGNED  D.W. MULLER

DEPUTY PRESIDENT

CATCHWORDS

PRACTICE AND PROCEDURE – the Tribunal has jurisdiction to review a decision of ASIC to approve or decline to approve a purpose of a person to use information obtained from the register of members of a credit union – party joined is an organisation or association of persons taken to have interests that are affected by decision under review

Corporations Act 2001: ss.173(3B)(b)(ii), 1317A, 1317B

Administrative Appeals Tribunal Act 1975: ss3, 25, 27, 30

Australian Securities and Investments Act 2001:  ss11, 244

John David Rich v ASIC (2004) ACLC 101

REASONS FOR DECISION AND ORDERS

Deputy President Don Muller        

JURISDICTION

1.      These applications for review arise out of an application by Mackay Permanent Building Society Limited (Mackay) to ASIC for approval by ASIC of four purposes for which Mackay sought access to the Register of Members’ Shares of Capricornia Credit Union Limited (Capricornia) with a view to informing Capricornia’s members about a proposal by Mackay to merge with Capricornia.

2.      ASIC approved three of the four purposes proposed by Mackay and declined to approve a fourth purpose.

3.      Mackay seeks a review by the Tribunal of ASIC’s decision to decline to approve one of the four purposes.

4.      Capricornia seeks a review by the Tribunal of ASIC’s decision to approve of three of Mackay’s four purposes.

5.      ASIC contends that the Tribunal does not have the jurisdiction to review the decisions in either the Mackay application or the Capricornia application.

6.      It was agreed between the parties that the question of jurisdiction be decided prior to embarking on a hearing on the merits.

7.      It was also agreed that these two matters be heard together.

8.      On or about 29 June 2004, Mackay met with members of the board of Capricornia for the purpose of submitting a proposal for the merger of Capricornia and Mackay.

9.      On or about 5 August 2004, the board of Capricornia wrote to Mackay and advised that the board of Capricornia has no interest in the merger proposal on the basis that it would not be in the best interests of Capricornia’s members.

10.     On 19 October 2004, the solicitors for Mackay applied to ASIC for an “approval of purposes” pursuant to sub-section 173(3B)(b)(ii) of the Corporations Act 2001, which provides:

“(3B) Also, the body corporate may refuse to give a person a copy of the part of the register for members of the body who hold member shares if the body is not satisfied that:

(a)       …

(b)the person proposes to use information obtained from that part of the register for a purpose that is approved in writing by ASIC:

(i)…

(ii)on the written application of the person or of another person.”

(A “body corporate” is : (a) a transferring financial institution of a State or Territory; or (b) a company that is permitted to use the expression, building society, credit society or credit union under section 66 of the Banking Act 1959).

11.     On 4 March 2005, ASIC notified both Mackay and Capricornia that it had decided to approve the following purposes applied for by Mackay:

(1)      to communicate material and other information to the members of Capricornia about the content (and consequences for them) of a proposal to merge Capricornia with Mackay;

(2)      to communicate material and other information to the members of Capricornia to assist them to consider and understand the merger proposal;  and

(3)      to communicate material and other information to the members of Capricornia to assist or facilitate convening a meeting of members to consider, and if thought proper pass, resolutions changing the composition of Capricornia’s board so that a majority of its directors (at least) are prepared to give effect to the directions of the members (as set out in any resolution passed by members) with regard to the proposal, and the appointment of proxies to vote at such a meeting on behalf of members.

And to decline to approve of the following purpose:

(4)      to communicate material and other information to the members of Capricornia to assist or facilitate convening a meeting of Capricornia’s members to consider, and if thought proper pass, resolutions giving directions to Capricornia’s board in relation to a merger proposal of Mackay in respect of Capricornia, and the appointment of proxies to vote at such a meeting on behalf of members.

12.     Mackay seeks a review by the Tribunal of ASIC's decision to decline to approve of purpose number (4) above.

13.     Capricornia seeks a review by the Tribunal of ASIC’s decision to approve of purposes numbered (1), (2) and (3) above.

14. The applications by Mackay and Capricornia for review by the Tribunal were made pursuant to sections 1317A and 1317B(1) of the Corporations Act, which provide:

“S.1317A:
In this Part:
‘decision’ has the same meaning as in the Administrative Appeals Tribunal Act 1975.

S.1317B(1):
“Subject to this Part, applications may be made to the Tribunal for review of a decision made under this Law by:
(a)       …
(b)       ASIC;
(c)       ….”

15.     The relevant subsections of the Administrative Appeals Tribunal Act 1975 (the AAT Act) are:

S.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;…”

S.25(4)

“The Tribunal has power to review any decision in respect of which application is made to it under any enactment.”

S.3(3)

“A reference in this Act to a decision includes a reference to –

(a)making, suspending, revoking or refusing to make an order or determination;

(b)giving, suspending, revoking or refusing to give a certificate, direction, approval, consent or permission;

(c)issuing, suspending, revoking or refusing to issue a licence, authority or other instrument;

(d)imposing a condition or restriction;

(e)making a declaration, demand or requirements;

(f)retaining, or refusing to deliver up, an article;  or

(g)doing or refusing to do any other act or thing.”

16.     The applicants submit that the Tribunal has jurisdiction to review the decision of ASIC dated 4 March 2005, in which ASIC approved of three purposes and declined to approve of a fourth purpose, for the following reasons:

(a)The process set out in s.173(3B)(b)(ii) of the Corporations Act for obtaining an approval, in writing, from ASIC clearly states that a written application must be made by the relevant person to ASIC, seeking approval of a purpose or purposes for the purposes of the relevant subsection, and that ASIC must either approve or not approve that application in writing.

(b)Mackay applied to ASIC in writing for approval of purposes.

(c)ASIC can approve those purposes, which it did for three of the purposes.

(d)ASIC can decline to approve those purposes, which it did for one of the purposes.

(e)Mackay is not permitted to use the Register of Members’ Shares of Capricornia for purpose (4) unless ASIC changes its mind, or the Tribunal decides otherwise.

(f)Capricornia must, on the facts so far disclosed, give Mackay access to its Register of Members’ Shares for the proposed purposes numbered (1), (2) and (3), unless ASIC changes its mind or unless the Tribunal decides otherwise.

(g)Sections 1317A and 1317B clearly and unambiguously allow for applications to be made to the Tribunal for review of a decision made under the Corporations Act by ASIC.

(h)The decisions by ASIC to approve or decline to approve the purposes applied for by Mackay are decisions within the meaning of that term in the AAT Act and consequently they are decisions within the meaning of that term in the Corporations Act.

17.     It was submitted on behalf of the Respondent that the Tribunal has no jurisdiction on two bases:

(a)The decisions which the Applicants seek to have reviewed, that is the decisions by ASIC to approve or decline to approve the proposed purposes set out above, are not final and determinative decisions and therefore do not meet the criteria in s.25 and s.3(3) of the Administrative Appeals Tribunal Act 1975; and

(b)The decision made by ASIC was made under s.11(4) of the Australian Securities and Investments Act 2001 (the ASIC Act) and is therefore not one of the decisions listed in s.244 of the ASIC Act, being decisions reviewable by the Tribunal.

18.     In relation to the first proposition, the following submission was made:

“The decision is not a final and determinative decision as ASIC’s approval to grant or not grant approval of a purpose for provision of Capricornia’s Register of Members, does not bind the body corporate who is providing that Register in any way. Even if ASIC granted approval in this case, it would still be in the discretion of Capricornia, pursuant to s.173(3B) of the Corporations Act 2001 (‘the Act’), whether or not to provide the Register of Members to a third party, such as the applicant, if Capricornia was of the view that the Applicant was intending using the Register for a purpose other than the purpose for which provision of the Register was approved.”

19.     In this case there is no suggestion that Mackay intends to act in any way other than according to law.  It does not intend to use the Register for a purpose other than the purposes approved by ASIC.  As the matter currently strands, Capricornia must give Mackay access to its Register for approved purposes (1), (2) and (3), and Capricornia does not have to give Mackay access to the Register for proposed purpose (4).  The decisions by ASIC in this instance have the effect of being final and determinative.  They are not just “steps along the way”.

20.     I reject the first proposition put forward by the Respondent in relation to jurisdiction.

21.     In relation to the second proposition the following submission was made:

“A plain reading of s.173(3B) above reveals no conferral of any power upon ASIC to approve or disapprove. The power to approve or disapprove is authorised by s11(4) of the ASIC Act.”

The relevant parts of section 11 are:

11(1) ASIC has such functions and powers as are conferred on it by or under the corporations legislation.

11(4) ASIC has power to do whatever is necessary for or in connection with, or reasonably incidental to, the performance of its functions.”

“The Respondent submits that its decision to refuse to approve a purpose for the purposes of sub-section 173(3B) was a decision under sub-section 11(4) of the ASIC Act, and not a decision under sub-section 173(3B) of the Act.

There is a distinction between functions or purposes or activities of an administrative body on the one hand, and the powers conferred upon it to perform or execute those functions, purposes and activities on the other. 

The Respondent submits that sub-section 173(3B) was not the source of the Respondent’s power to approve a purpose.  This sub-section only deals with the discretion given to a body corporate to refuse to give a person a copy of the register for members who hold members shares (members register).  Sub-section 173(3B) provides a body corporate the power to refuse to provide a members register.  The approval by the Respondent of a purpose for the use of information from the members register is merely a matter that the body corporate must take into account when deciding whether to provide the members register. 

Sub-section 173(3B) only confers a function on the Respondent. Sub-section 11(4) of the ASIC Act expressly confers the power to exercise that function on the Respondent. As there is an express power in sub-section 11(4) of the ASIC Act, there is no need to rely on the implication of such power into sub-section 173(3B).

A decision made under sub-section 11(4) of the ASIC Act is not included in the list of reviewable matters as set out in section 244 of the ASIC Act.”

22.     The Tribunal was referred to a large number of cases which, it was submitted, supported the Respondent’s propositions. I do not accept that they support the Respondent’s stand.  Those cases have been exhaustively analysed by the President of the Tribunal, Downes J, in a decision John David Rich v ASIC (2004) 22 ACLC 101. I do not intend to repeat his analysis here, but I take comfort from the result of his analysis in which he said:

“20.  I turn to a brief analysis of the jurisdictional basis for the application in terms of the statutory provisions and I begin by reference to s 25 of the Administrative Appeals Tribunal Act.  Subsection 25(1) is as follows:

‘(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 the review of decisions made in the exercise of powers conferred, or that may be conferred, by another enactment having effect under that enactment.’

21. I am conscious of the fact that s 25 refers to the exercise of powers but it does so by reference both to enactments granting powers which also confer the right of review as well as to enactments in which the conferral of the right of review and the conferral of the power may be different. So far as I am aware it is only the words I have referred to in s 25 which, in terms of statutory provisions, address the role of the Administrative Appeals Tribunal by reference to ‘decisions made in the exercise of powers’. When I turn to s 1317B of the Corporations Act, which is the section conferring power on the Tribunal to review decisions of the Commission made under the Corporations Act, I do not find any reference to powers. The right of review provided for in s 1317B is conferred simply in terms of decisions made under the Corporations Act. It follows, as Foster J said in his decision, that the primary consideration is whether there has been ‘a decision made under this law’.

22.  It seems to me that the power or function under s 536 to consider and act upon allegations that a liquidator has failed to perform his functions involves conduct different to that described by Foster J when finding that there was no jurisdiction in Creswick.  In particular, it seems to me that s 536 does more than identify the ASC as the party who can make an application.  It also seems to me that it is not correct to say that the conduct is not authorised by the section.  Indeed it seems to me that s 536 spells out in very plain words what is the function of the Commission in terms which also confer power on it to carry out that function.  Words such as ‘may inquire’, ‘may report’ and similar phrases are phrases which speak to me of power as well as function.

23. For reasons I have given above I do not read the decisions in any of the cases I have been referred to as containing any findings, obiter or otherwise, which would have the effect of compelling a conclusion that the Administrative Appeals Tribunal does not have power to review decisions made under s 536 of the Corporations Act. My own examination of the statutory provisions causes me to think that the Tribunal does have jurisdiction.

24.  I accordingly conclude, to the extent to which it is relevant to the question of the summons, that the Administrative Appeals Tribunal does have jurisdiction under s 536 and that being so, depending upon the facts as they are ultimately found, may determine that a decision has been made under s 536 which will be subject to review.”

23.     I respectfully agree with the President’s reasoning and adopt and apply it in the cases of Mackay and Capricornia.

24.     I find that the Tribunal has jurisdiction to review the decisions the subject of these applications.

PARTY JOINED

25. There is an application by Credit Union Services Corporation Australia Limited (CUSCAL) to be joined as a party to these applications, pursuant to sections 27 and 30 of the AAT Act. The relevant parts of which are:

“27 Persons who may apply to Tribunal

(1)Where this Act or any other enactment (other than the Australian Security Intelligence Organisation Act 1979) provides that an application may be made to the Tribunal for a review of a decision, the application may be made by or on behalf of any person or persons (including the Commonwealth or an authority of the Commonwealth) whose interests are affected by the decision.

(2)An organization or association of persons, whether incorporated or not, shall be taken to have interests that are affected by a decision if the decision relates to a matter included in the objects or purposes of the organization or association.”

30 Parties to proceedings before Tribunal

(1) Subject to paragraph 42A(2)(b), the parties to a proceeding before the Tribunal for a review of a decision are:

(a)any person who, being entitled to do so, has duly applied to the Tribunal for a review of the decision;

(b)the person who made the decision;

(c)…

(d)any other person who has been made a party to the proceeding by the Tribunal on application by the person in accordance with subsection (1A).

(1A)Where an application has been made by a person to the Tribunal for a review of a decision, any other person whose interests are affected by the decision may apply, in writing, to the Tribunal to be made a party to the proceeding, and the Tribunal may, in its discretion, by order, made that person a party to the proceeding.”

26. Material put before the Tribunal indicates that CUSCAL has approximately 147 credit unions as members of its group. (Capricornia is not one of them.) CUSCAL has been involved in lobbying and in making submissions in relation to the formulation of sections of the Corporations Act, the subject of these reviews. The members of CUSCAL have an interest in the formulation of policies and precedents in relation to decisions made by ASIC in approving or not approving of purposes in relation to s.173(3B) of the Corporations Act.

27. I am satisfied that CUSCAL is an organisation or association which satisfies sections 27 and 30 of the AAT Act. Consequently, I direct that CUSCAL be made a party to these proceedings.

RESTRICTION ON PUBLICATION OF DOCUMENTS

28.     Application has been made by Mackay for an order restricting the publication of certain documents which were part of the original application by Mackay to ASIC.  They are folios 23-41 inclusive of T4 of the section 37 statement in Q2005/154.

29.     I am satisfied that those documents contain material of a sensitive commercial value and I find that it is desirable to restrict the publication of the said documents by reason of their confidential nature.

I certify that the 29 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President Don Muller

Signed:         .....................................................................................
           B. Hitchcock, Personal Assistant

Date/s of Hearing    9 May 2005
Date of Decision   16 June 2005
Counsel for the Applicant           Mr. P. Bickford
Solicitor for the Applicant            Blake Dawson Waldron
Counsel for the Respondent       Ms. C. Conway