Mark Levi and Companies Auditors and Liquidators Disciplinary Board Australian Securities Investment Commission JOINED PARTY
[2013] AATA 576
[2013] AATA 576
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2013/3139
Re
Mark Levi
APPLICANT
And
Companies Auditors and Liquidators Disciplinary Board
RESPONDENT
And
Australian Securities Investment Commission
JOINED PARTY
Decision
Tribunal Deputy President RP Handley
Date 16 August 2013 Place Sydney The application for a stay and confidentiality orders is refused.
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Deputy President RP Handley
Catchwords
PRACTICE AND PROCEDURE – Cancellation of registration of a liquidator under s 1292 of the Corporations Act - power to stay or otherwise affect the operation or implementation of a decision under review - whether stay necessary to secure effectiveness of hearing and determination of the application for review - prospects of success – prejudice to parties - public interest – possibility of criminal prosecution – confidentiality orders sought – hearings to be in public except in exceptional circumstances – whether it is desirable to make an order by reason of the confidential nature of any evidence or matter or for any other reason – applications refused
Legislation
Administrative Appeals Tribunal Act 1975 ss 35, 41
Corporations Act 2001 ss 1274, 1286, 1296
Taxation Administration Act 1953 ss 355-25, 355-30, 355-70, 355-175Cases
Australian Securities and Investments Commission v Administrative Appeals Tribunal and Another (2009) 181 FCR 130
Australian Securities and Investments Commission v HLP Financial Planning (Aust) Pty Ltd [2007] FCA 1868
John Fairfax Publications Pty Ltd and Another v District Court of NSW and Others (2004) 61 NSWLR 344
Levi and Companies Auditors and Liquidators Disciplinary Board [2013] AATA 463
Levi v Companies Auditors and Liquidators Disciplinary Board [2013] FCA 719
Levi v Australian Securities and Investments Commission (No 2) [2013] NSWSC 932
Klusman and Australian Securities and Investments Commission [2010] AATA 709
ML v Australian Securities and Investments Commission [2013] NSWSC 283
ML v Australian Securities and Investments Commission [2013] NSWCA 109REASONS FOR DECISION
Deputy President RP Handley
16 August 2013
This is a remittal from the Federal Court pursuant to the decision of Farrell J in Levi v Companies Auditors and Liquidators Disciplinary Board [2013] FCA 719. Her Honour issued a writ of certiorari quashing the Tribunal’s decision in Levi and Companies Auditors and Liquidators Disciplinary Board [2013] AATA 463 and a writ of mandamus requiring the Tribunal to determine the Applicant, Mr Levi’s application for a stay of the decision of the Companies Auditors and Liquidators Disciplinary Board (the Board) and for confidentiality orders according to law.
The background to this matter is described in my original decision as follows:
1. Mr Levi has applied to the Tribunal for the review of a decision of the Companies Auditors and Liquidators Disciplinary Board (the Board) dated 2 July 2013 to cancel his registration as a liquidator. Mr Levi has also applied for an order staying the operation and implementation of the decision and ancillary orders (the stay application), and for confidentiality orders. This interlocutory decision and the reasons that follow concern the stay application and the application for confidentiality orders.
Background
2. The background to this matter is set out in in the written reasons for the Board’s decision dated 2 July 2013 provided to Mr Levi. In brief, on 12 October 2012, ASIC lodged an application with the Board for the cancellation of Mr Levi’s registration as a liquidator. The allegations made by ASIC concerned actions taken by Mr Levi when he was a senior member of the staff of Jamieson Louttit & Associates (JLA), an insolvency and corporate advisory practice in Sydney. This is a firm owned and controlled by Jamieson Louttit who is a registered liquidator and, at the relevant time, was the receiver of a company known as Biseja Pty Ltd (Biseja).
3. The Board states at paragraph 3 of its reasons:
ASIC alleges that in April 2009 and again in October 2009, Mr Levi used Biseja’s funds to pay his personal tax. ASIC alleges that Mr Levi falsified the records of Biseja to disguise these payments. ASIC alleges that Mr Levi admitted the defalcations in October 2010, after he had just left JLA. ASIC alleges that Mr Levi has, since that admission, falsely asserted that the payments were made with Mr Louttit’s knowledge and consent.
4. The Board conducted a hearing in this matter on 6 to 9 May 2013 and handed down its determination on 14 June 2013. The Board summarised its findings at paragraph 464 of its reasons:
… Suffice to say that we have made findings that Mr Levi engaged in serious acts of dishonesty in misappropriating funds, in falsification of records in order to disguise misappropriation and in putting forward a false version of events after having admitted the misappropriation to Mr Louttit. Mr Levi’s dishonesty was not an isolated lapse, but involved dishonesty on a number of occasions over a period of time. We have found that Mr Levi has been persistently dishonest, that it is inappropriate to assume (and the community could not be confident) that his conduct will not recur and that his actions show that he has a character which is fundamentally inimical to fitness to practice as a liquidator.
5. The Board conducted a further hearing on 26 June 2013 for submissions on appropriate sanctions. The Board decided that in view of the “serious acts of dishonesty”, a period of suspension was not appropriate and that “Mr Levi’s conduct in the present case was fundamentally at odds with proper performance of the office of liquidator, to such a degree that cancellation of his registration is demanded”. The Board decided that within 14 days of the date of the decision, a formal notice of the decision would be given to Mr Levi, a copy of the notice lodged with ASIC and the Board would cause to be published in the Gazette a notice in writing setting out the decision.
The Tribunal is empowered to issue a stay and ancillary orders pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975 (the AAT Act). This states:
(2) The Tribunal may, on request being made, as prescribed, by a party to a proceeding before the Tribunal (in this section referred to as the relevant proceeding), if the Tribunal is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make such order or orders staying or otherwise affecting the operation or implementation of the decision to which the relevant proceeding relates or a part of that decision as the Tribunal considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review.
Pursuant to s 35 of the AAT Act, the Tribunal is also empowered to make confidentiality orders. However, the basic principle is that proceedings before the Tribunal shall be in public and that evidence given before the Tribunal and the contents of documents lodged with the Tribunal or received in evidence by the Tribunal should be made available to the public and to all parties. Section 35 states relevantly:
(1) Subject to this section, the hearing of a proceeding before the Tribunal shall be in public.
...
(2) Where the Tribunal is satisfied that it is desirable to do so by reason of the confidential nature of any evidence or matter or for any other reason, the Tribunal may, by order:
(a) direct that a hearing or part of a hearing shall take place in private and give directions as to the persons who may be present; and
(aa) give directions prohibiting or restricting the publication of the names and addresses of witnesses appearing before the Tribunal; and
(b) give directions prohibiting or restricting the publication of evidence given before the Tribunal, whether in public or in private, or of matters contained in documents lodged with the Tribunal or received in evidence by the Tribunal; and
(c) give directions prohibiting or restricting the disclosure to some or all of the parties to a proceeding of evidence given before the Tribunal, or of the contents of a document lodged with the Tribunal or received in evidence by the Tribunal, in relation to the proceeding.
(3) In considering:
(a) whether the hearing of a proceeding should be held in private; or
(b) whether publication, or disclosure to some or all of the parties, of evidence given before the Tribunal, or of a matter contained in a document lodged with the Tribunal or received in evidence by the Tribunal, should be prohibited or restricted;
the Tribunal shall take as the basis of its consideration the principle that it is desirable that hearings of proceedings before the Tribunal should be held in public and that evidence given before the Tribunal and the contents of documents lodged with the Tribunal or received in evidence by the Tribunal should be made available to the public and to all the parties, but shall pay due regard to any reasons given to the Tribunal why the hearing should be held in private or why publication or disclosure of the evidence or the matter contained in the document should be prohibited or restricted.
The Remittal Decision
Farrell J expressed concern about my balancing of competing interests and, in particular, my discussion of the prospects of success of Mr Levi’s application and of the public interest, especially (at [44]):
… the public interest in the due administration of criminal justice and possible prejudice to the conduct of criminal proceedings if jurors became aware that the applicant has been deregistered. This is significant where, as here, the Deputy President had the option of accepting an undertaking from the applicant not to practice and the likelihood of an expedited hearing of the Substantive Proceedings. The Deputy President would also have been entitled to take into account that although deregistration alone may engender some publicity, its possible impact on subsequent criminal proceedings and the due administration of criminal justice may be minimised because this fact alone is likely to be susceptible of appropriate directions from a judge.
Her Honour referred to the NSW Supreme Court decision in Levi v Australian Securities and Investments Commission (No 2) [2013] NSWSC 932 (Levi No 2) in which, on 16 July 2013 (after the Tribunal’s original decision in this matter), Rothman J lifted the suppression order he had previously made on the identification of the Applicant in his decision of 3 April 2013, in which he rejected an application for a stay of the hearing conducted by the Board in May 2013: ML v Australian Securities and Investments Commission [2013] NSWSC 283 (Levi No 1). This decision was the subject of an appeal to the NSW Court of Appeal, the outcome of which was that Basten JA dismissed the application for a stay of the Board’s proceedings and made an interim order that the name of the applicant and information allowing him to be identified not be published pending a further order of the Court of Appeal or of the Common Law Division of the Supreme Court, whichever first occurred: ML v Australian Securities and Investments Commission [2013] NSWCA 109 (ML v ASIC). When Rothman J made his decision in Levi No 2, this had the effect of lifting the interim order made by Basten JA.
In Levi No 2, Rothman J said at [37]-[42]:
In the instant proceedings, the suppression orders are sought in order to ensure the plaintiff has a fair criminal trial, if and when one commences. The fact that the criminal trial has not commenced is a factor to be taken into account in this exercise. Nevertheless, as stated in the first judgment, I consider a criminal prosecution likely.
However, orders do not issue to ensure a fair trial. Rather, orders issue to prevent a significant risk of an unfair trial. The risk of unfairness is the publication of the decision of the Board on the internet, including findings of fact therein, and any other mass circulation publicity that may be given to it. That publication or publicity may, in turn, become known to a jury, or members of it.
Adverse publicity relating to an accused is not an unknown occurrence. It is dealt with, regularly, by the courts. So too is information on the internet. The material before the Court does not establish a real risk to any subsequent fair trial. If such a risk eventuates, the trial judge can deal with it.
If, eventually, there is a criminal prosecution, there may be a plea of guilty. Assuming there were not, the trial judge can assess what, if any, publicity has been given to the decision of the Board, the nature of the findings, the period of time that has elapsed, and the risk, if any, to a fair trial. ASIC is the moving party before the Board. ASIC is also the complainant or prosecutor for any criminal prosecution.
ASIC must understand that if, as a result of the Board decision and any publicity given to it, a fair trial in a subsequent prosecution were at risk, in the discretion of the court, any prosecution may be stayed, either permanently or for some time. Yet ASIC is entitled to take that risk. It may well be more in the public interest that an inappropriate person be prevented from practising as a liquidator, than a criminal prosecution be successfully completed.
For the foregoing reasons, a suppression order should not be made.
Earlier in his decision, Rothman J said at [35]-[36]:
The primary consideration in the proper administration of justice must be the public interest in open justice. The very fabric of Australian democracy depends on the rule of law, which includes the proposition that, with a small number of important exceptions, justice is to be dispensed in public and the courts are to be conducted under public scrutiny.
Any orders qualifying that public scrutiny should be as limited as possible, while achieving the intended purpose. …
Farrell J stated the following conclusion on this issue at [49]-[50]:
… the potential for criminal proceedings…is a public interest concern. It should be addressed specifically.
The circumstances of each case must be considered individually. It is open to the Deputy President to make or withhold a stay order having taken these considerations into account. However, the interlocutory decision does not reveal that this has occurred.
With respect to confidentiality orders, her Honour referred to the atmosphere in which the parties engendered a sense of urgency as being unhelpful.
The Applicant’s Submissions
Mr Sutherland, for Mr Levi, noted that on 11 May 2013, Mr Louttit lodged a request with ASIC for a correction to information supplied to ASIC detailing remuneration of $90,454.10 paid to him (comprising two payments of $45,227.05) for his work as a receiver of Biseja for the period to 30 September 2008. Mr Sutherland contended that Mr Louttit’s lodging of the Form 492 ‘Request for correction’ provides some support for Mr Levi’s explanation for his conduct, which is that he has always maintained that he thought Mr Louttit was owed money by Biseja. Mr Levi maintains that he did not deceive Mr Louttit and that Mr Louttit was a knowing participant in the drawing of the two cheques on Biseja’s account pursuant to a profit-sharing agreement between him and Mr Levi pursuant to which Mr Levi was entitled to payment of his share of the remuneration. Mr Sutherland contended that if Mr Levi’s explanation is true, this explains his dealings with Mr Louttit and negates the allegation of fraud. Mr Sutherland said that while the course adopted by Mr Levi was irregular, there was no criminality involved and the principal allegation against him falls away.
Mr Sutherland said, in the light of this, the evidence in relation to the BAS statement for the period July to September 2009 and whether and by whom it was altered becomes a critical question. The original BAS Statement was made available by ASIC for the purpose of forensic examination, and an advice was prepared by a Forensic Document and Handwriting Examiner, Michelle Novotny, dated 21 September 2012. The advice states, referring to entries on the BAS Statement:
The black ink entry in section 1A currently reads “27326”. While the entry is itself overwritten, there is also evidence of a pencil entry having been erased. This (presumably underlying) pencil entry appears to read “96348”, although there could be a pencil “1”, “7” or “4” overlapping with the “6”, and the “8” could be a “5”.
The black ink entry in section 9 currently reads “18723”. While the entry is itself overwritten, there is evidence of a pencil entry having been erased. This (presumably underlying) pencil entry appears to read “877?5”, although the “8” could be a “5” and the first “7” could be a “8”. I am unable to recover/decipher the fourth digit in this numeral entry.
In an affidavit dated 3 July 2013, Mr Levi’s solicitor, John Sutton, said that on 3 July 2013, he contacted Ms Novotny and asked her to confirm whether or not she observed any ‘white out’ used on the BAS Statement. Mr Sutton said Ms Novotny phoned him shortly after to say that “there was no correction fluid or tape (‘white out’)” on the document, which she confirmed by email to Mr Sutton on 3 July 2013 at 9.35 am, a copy of which was attached to Mr Sutton’s affidavit. Mr Sutherland said Mr Levi was denied procedural fairness in the Board proceedings because the original BAS Statement was not produced in the proceedings. In his reply, Mr Sutherland disagreed with Mr Johnson’s contention that disclosure of the BAS Statement was prohibited by s 355-25(1) of the Taxation Administration Act 1953 (TAA 1953) (see below) contending that disclosure is likely to fall within one of the permitted exceptions, for example, where, pursuant to s 355-70, disclosure is to a court or tribunal for law enforcement or related purposes, or, pursuant to s 355-175(2), for the purpose of criminal, civil or administrative proceedings (including merits review or judicial review) that are related to the original purpose.
Mr Sutherland said the evidence in relation to the alteration of the BAS Statement undermines the contention that Mr Louttit was deceived. If he was not deceived, the findings of dishonesty cannot be sustained and there are good prospects for the success of Mr Levi’s submissions on the review. Mr Sutherland turned to ASIC’s contention that even if Mr Levi’s explanation is accepted, he would still not be a fit and proper person to be a liquidator, because, as the Board found at [404]-[406], a fit and proper person would not have knowingly taken funds from Biseja’s receivership account for his own purpose contrary to the obligations of a receiver in relation to such an account. Mr Sutherland submitted that the focus of the allegations against Mr Levi was that he had dishonestly deceived Mr Louttit. If doubt attached to the allegation that Mr Louttit was deceived, this must necessarily affect the balancing of relevant considerations.
With regard to possible prejudice to criminal proceedings, Mr Sutherland noted Mr Levi’s undertakings to the Federal Court with a view to protecting the public interest by removing himself as a liquidator from those companies where he has a current appointment and by not taking on any further appointments. Mr Levi has applied to the Federal Court to approve his removal as an external administrator in respect of the remaining three companies where his ceasing to act has not yet been approved (see the statement of Stavros Tsakalos, Accountant in ASIC’s Insolvency Practitioners Stakeholder team, dated 2 August 2013).
Mr Sutherland referred to an affidavit provided to Rothman J about possible criminal proceedings, it being common ground that consideration is being given to criminal proceedings being instituted. Mr Sutherland noted Rothman J’s reference, at [40]-[41] of Levi No 2, to the risk to a fair trial borne by ASIC if publicity is given to the decision of the Board. The Tribunal is in a position to prevent prejudice to the administration of justice by preventing highly prejudicial material concerning Mr Levi’s matter leaking to the internet (for example, the Sydney Insolvency News ‘blogspot’, referred to in Mr Tsakalos’s statement of 2 August 2013) before any criminal trial.
Mr Sutherland referred to the factors identified by Farrell J (at [46]) which she said it is appropriate to weigh in the balance in deciding whether or not to stay publication of the Reasons of the Board and which, he submitted, make it highly desirable to preserve the status quo.
ASIC’s Submissions
Mr Johnson, for ASIC, referred to Rothman J’s finding that a prosecution was “on the cards” which, Mr Johnson submitted, can be accepted by the Tribunal. Mr Johnson noted that it is the Supreme Court of NSW which is ultimately responsible for the administration of criminal justice in NSW. The Court has decided that judges should give directions to juries as to how they should determine issues before them.
Mr Johnson said that in Mr Levi’s case, the Supreme Court has decided that there is a public interest in the Board proceedings continuing. If there is risk of prejudice to a fair trial, that risk can be dealt with by way of directions by the judge to the jury.
With regard to the prospects of success of Mr Levi’s application, Mr Johnson said it should be noted that the Board’s decision did not depend on whether Mr Levi deceived Mr Louttit. Even if he did not do so, Mr Levi’s receiving funds from Biseja’s account for his own purposes was dishonest. With regard to Ms Novotny’s report on changes made to the BAS Statement, even if ‘white out’ was not used, her evidence indicates that there were other forms of alteration used. Mr Johnson noted the prohibition on disclosure imposed by s 355-25(1) of the TAA 1953, which prevented ASIC using the original BAS Statement in the disciplinary proceedings, as a result of it being ‘protected information’ as defined in s 355-30(1). ASIC contends that disclosure would not fall within any of the exceptions in the Act. In any event, Mr Johnson contended that the Applicant’s prospects of success in the substantive Tribunal proceedings “are not at all good” (paragraph 18, ASIC’s written submissions).
Mr Johnson contended that the Form 492 lodged by Mr Louttit does not give Mr Levi prospects of success in his application. In a statement by Mr Louttit provided to the Board, dated 15 February 2013 (T5), at paragraph 67, he said that it was an oversight not to record the payment of remuneration by Biseja in the Form 524. Mr Johnson said that no new evidence has been filed in relation to the Board decision except for Mr Sutton’s statement. Mr Johnson referred to the decision of the President of the Tribunal, Downes J, in Klusman and Australian Securities Investment Commission [2010] AATA 709 (Klusman), at [7], where the President proceeded on the basis that Mr Klusman might be able to demonstrate “a strong to very strong case before the Tribunal”. Notwithstanding this, the President declined to grant the interlocutory relief sought relating to confidentiality because of the public interest.
Mr Johnson submitted that that any risk of prejudice to criminal proceedings can be dealt with as Rothman J suggested (Levy No 1, at [56]-[57]). Mr Johnson referred to the provisions of the Corporations Act 2001 requiring ASIC to maintain a Register of Liquidators (s 1286) which is available for public inspection (s 1274(2)). If Mr Levi remains registered, the public is entitled to assume he is a fit and proper person. The intention of the Legislature is clear from subsections 1296(1) and (1B): that the Board must cause to be published in the Gazette a notice in writing setting out its decision and may take such steps as it considers reasonable and appropriate to publicise its decision and the reasons for its decision.
Mr Johnson referred to the decision of the Full Federal Court in Australian Securities and Investments Commission v Administrative Appeals Tribunal and Another (2009) 181 FCR 130 (ASIC v AAT), at [75], where the Court said “Suppression orders are rarely made in courts, even though publicity undoubtedly disadvantages the parties.” The occasion for the imposition of an order staying publication of a banning order made under the Corporations Act will be “rare”. The fact of Mr Levi having offered an undertaking not to work as a liquidator does not entitle him to relief. Mr Johnson submitted that the public interest considerations identified in ASIC v AAT outweigh the risk asserted by the Applicant of the impact upon a jury of potential publicity.
Mr Johnson said that the Supreme Court decisions involving Mr Levi are already in the public domain and available on the internet and a large amount of information about these proceedings is already publicly available. It is not evident what information not in the public domain could justify an order under either s 41(2) or s 35(2) of the AAT Act. With regard to a s 35(2) order, Mr Johnson said there is a public interest in open justice and transparency which militates against such an order being made. If criminal proceedings are instituted, it will be open to Mr Levi to apply to the Supreme Court for appropriate orders in relation to those proceedings. The public interest lies in the public and the market in which Mr Levi operates being fully informed.
Discussion
As stated in my original decision, the issues are as follows:
11. The first issue for the Tribunal, pursuant to the application under s 41(2) of the AAT Act, is whether in the Tribunal’s opinion, after taking into account the interests of any persons who may be affected by the review, it is desirable to “make such order or orders staying or otherwise affecting the operation or implementation of the decision” to cancel Mr Levi’s registration as a liquidator “for the purpose of securing the effectiveness of the hearing and determination of the application for review”.
12. The second issue for the Tribunal is whether, bearing in mind the Tribunal’s obligation to take as the basis of its consideration the desirability of its hearings being held in public and that evidence given before the Tribunal and the contents of documents lodged with or received in evidence by the Tribunal should be available to the public and to all parties, it is desirable to make a confidentiality order under s 35(2) of the AAT Act.
The Stay Application
In her decision, Farrell J referred to my discussion of the relevant factors for consideration in deciding whether to grant a stay as being without error and uncontentious. Her Honour stated, at [14]-[15]:
Having acknowledged the statutory basis of the AAT’s power to make a stay order, the Deputy President considered, at [24] of the Interlocutory Decision, the factors considered relevant to the AAT’s consideration of whether a stay should be granted having regard to the decisions of the AAT in Re Griffiths Grif-Air Helicopters Pty Ltd and Civil Aviation Authority (1993) 31 ALD 380 and Scott and Australian Securities and Investments Commission (2009) 51 AAR 114 at [4]:
·The prospects of success or merits of the application for review;
·Any prejudice to or effect on the parties or on any person if a stay is not granted;
·The public interest; and
·Whether the review application, if successful, would be rendered nugatory or pointless if a stay is not granted.
The Deputy President went on to consider at [25] and [26] of the Interlocutory Decision the joint judgment of Downes and Jagot JJ in Australian Securities and Investments Commission v Administrative Appeals Tribunal and Another (2009) 181 FCR 130 and drew out factors which may be summarised as:
·In forming an opinion that making an order under s 41(2) of the AAT Act is desirable taking into account the interests of any persons who may be affected by the review, the AAT must identify for itself and consider the relevant interests, which are to be identified by reference to the statutory scheme under which the decision under review was made;
·In making its decision, the AAT must resolve potentially competing interests. Thus the balance between competing interests must be treated as a fundamental element in the weighing of the competing considerations;
·The context in which the decision under review has been made is important. In that case, as in this, the context is the scheme established by the Corporations Act for the protection of the public interest, and in this case for maintaining the integrity of and public confidence in the profession of liquidators (accepting a submission of counsel for ASIC).
I have had particular regard to Farrell J’s expressed concern about my balancing of competing interests and, in particular, my discussion of the prospects of success of the Applicant’s application and of the public interest, especially the public interest in the administration of criminal justice and possible prejudice to any future criminal proceedings.
With regard to the prospects of success of Mr Levi’s application for review, the evidence to which I have been referred by the Applicant is that concerning the BAS Statement for Biseja for the period July to September 2009 and Mr Louttit’s lodging of a Form 492 ‘Request for correction’ with ASIC, detailing remuneration received by Mr Louttit from Biseja for his work as its receiver. In relation to the latter, it appears from a statement made by Mr Louttit in the Board proceedings on 15 February 2013, at paragraph 67, that he has already acknowledged “[i]t was an oversight not to include this payment” in the form 524 filed by JLA. With regard to the BAS Statement, the forensic evidence of Ms Novotny, while ruling out the use of correction fluid or tape (‘white out’) in altering the figures on the document, appears to provide no definitive answer as to whether Mr Levi was involved in altering the figures. If, as Mr Sutherland submitted, the evidence indicates that Mr Levi did not deceive Mr Louttit, I note the Board’s comment at [405], that:
… even if not dishonest, Mr Levi’s conduct in accepting payment in the manner in which he did, and in the circumstances which prevailed, would in our view, still have shown that he was not a fit and proper person to remain registered as a liquidator.
Notwithstanding the evidence referred to above, given what is a weighty decision by the Board, it is not clear to me that Mr Levi has strong prospects of success. I note that the Board conducted a hearing in this matter (as required by the Corporations Act) over the course of four days, plus a further hearing about two weeks after their decision, to discuss sanctions. The Board’s decision is of 484 paragraphs and 120 pages in length.
With regard to any prejudice to the Applicant if a stay is not granted, as I said in my original decision:
30. … I am mindful of the comments made by Downes and Jagot JJ in Australian Securities and Investments Commission v Administrative Appeals Tribunal about this consideration when they said, at paragraph 57, that the effect on the person’s business and the consequences for the employees of the business and the person’s dependents “may be of lesser significance” to the other matters to which they referred and clearly, in particular, to the public interest.
31. As Ms Stern pointed out, Mr Levi has stated in his affidavit that his work as a liquidator represents 50% of his business. Notwithstanding this, I accept that publication of the decision to cancel his registration as a liquidator is likely to have a significant effect on his professional reputation at least in the short term. …
I also accept that if stay and confidentiality orders are not made and criminal proceedings are instituted against Mr Levi, this may pose a risk to Mr Levi’s receiving a fair trial.
With regard to the public interest, in my original decision, at [26], I stated:
In Australian Securities and Investments Commission v Administrative Appeals Tribunal, their Honours, as Ms Stern pointed out, also drew attention to the importance of the context in which the decision under review has been made. In that case, as in this, the context is the scheme established under the Corporations Act for the protection of the public interest, and in this instance for maintaining the integrity of and public confidence in the profession of liquidators.
The context here is, as Mr Johnson pointed out, a requirement in s 1296(1) of the Corporations Act for the decision of the Board to be published in the Gazette and, pursuant to s 1296(1B), the Board may also take such steps as it considers reasonable and appropriate to publish its decision and the reasons for its decision, including making its decision and reasons available on the internet.
I also note the comments made by the President of the Tribunal, Downes J in Klusman, who, while proceeding on the basis that Mr Klusman had a strong to very strong case (at [7]), emphasised the right of persons operating in the market to be fully informed (at [14]).
With regard to the public interest in the administration of justice, the parties accept that criminal proceedings are “on the cards”. That this is the case is referred to by Rothman J, for example in Levi No 1, at [2] and [25], and Levi No 2, at [37]. Farrell J referred to what appears to have been the starting point for the use of this phrase, by Finkelstein J in Australian Securities and Investments Commission v HLP Financial Planning (Aust) Pty Ltd [2007] FCA 1868, at [59], a case which, Rothman J commented, concerned significantly different discretionary issues (Levi No 1, at [59]). The case concerned whether a civil court should grant an application for declaratory and injunctive relief where a criminal prosecution was “on the cards”. I note Basten JA’s comment in ML v ASIC, at [17], that the phrase ‘on the cards’ “has no precise meaning, but it may be understood to refer to a real and not fanciful chance that a particular step will be taken, at some undefined time”. While I accept that Rothman J considered “a criminal prosecution likely” (Levi No 2, at [37]), I note the information provided by Mr Johnson that no brief has yet been provided to the Director of Public Prosecutions.
Since the original Tribunal proceedings, significantly more information is in the public domain as a result of the publication of Rothman J’s decisions, the decision of Basten JA and that of Farrell J. During the remittal hearing counsel drew my attention to a blog called Sydney Insolvency News which refers to the proceedings before Rothman J and the decision on appeal by Basten JA.
Given the level of public information already available, I am not satisfied that the public interest in the administration of criminal justice outweighs the public interest in making all relevant information available to the public about the Board’s decision to cancel Mr Levi’s registration as a liquidator and the public interest in open justice. I note Rothman J’s comments about the steps that may be taken by a court where it considers that a fair trial is at risk. He states that adverse publicity relating to an accused is dealt with regularly by the courts and, if such a risk eventuates, the trial judge has a discretion to deal with this. This was referred to by the NSW Court of Appeal in John Fairfax Publications Pty Ltd and Another v District Court of NSW and Others (2004) 61 NSWLR 344 (Fairfax v District Court), to which Mr Johnson referred me, where, at [103], Spigelman CJ, with whom Handley JA and MW Campbell A-JA agreed, said:
There are now a significant number of cases in which the issue has arisen as to whether or not an accused was able to have a fair trial in the light of substantial media publicity, indeed publicity much more sensational and sustained than anything that occurred here. Those cases have decisively rejected the previous tendency to regard jurors as exceptionally fragile and prone to prejudice. Trial judges of considerable experience have asserted, again and again, that jurors approach their task in accordance with the oath they take, that they listen to the directions that they are given and implement them. In particular that they listen to the direction that they are to determine guilt only on the evidence before them.
I note, however, the papers to which Mr Sutherland referred me by former Chief Justice Spigelman and Justice Bell of the High Court about the risk of prejudice to a fair trial posed by the internet and other mass media: Spigelman JJ, “The Internet and the Right to a Fair Trial”, paper delivered to the 6th World Wide Common Law Judiciary Conference, Washington DC, 1 June 2005; Bell V, “How to Preserve the Integrity of Jury Trials in a Mass Media Age”, Supreme and Federal Courts Judges’ Conference, January 2005.
For the reasons expressed by Rothman J in Levi No 2, at [39]-[41], and by the NSW Court of Appeal in Fairfax v District Court, and especially given the information about the matter that is already in the public domain, I am also not satisfied that the undertakings offered by Mr Levi to cease acting as a liquidator pending the determination of the substantive proceedings, outweigh the public interest in having all relevant information available and in open justice.
On a balancing of the competing interests, I am not satisfied that I should issue a stay as requested by the Applicant. In my view, the appropriate course is for Mr Levi’s application to be dealt with by way of an expedited hearing.
Application for Confidentiality Orders
As stated above, the second issue for the Tribunal to decide is whether to make the confidentiality orders sought by the Applicant. Given the requirement in the Corporations Act for publication of the Board’s decision in the Gazette, and the powers of the Board to publish its decision and reasons elsewhere, it is difficult to separate out the relevant considerations in relation to the application for a Stay, discussed above, and the application for confidentiality orders. As the Federal Court emphasised in ASIC v AAT, the stated expectation in s 35(1) of the AAT Act is that hearings should be in public. Downes and Jagot JJ stated at [76]:
When measured against the existence of the norm of a public hearing and the scheme established by the Corporations Act with respect to banning orders, it is apparent that the AAT would need some cogent reason by reference to the particular case to depart from the ordinary requirement of a public hearing. It is difficult to accept that harm (even serious harm) to the recipient's reputation resulting from public awareness of the banning order will be a sufficiently cogent reason to justify the grant of a stay in most cases. This is because the risk of harm of this type is inherent in the nature of a banning order.
Given the scheme established by the Corporations Act with respect to the registration of liquidators, and the public interest in relevant information stemming from the outcome of the Board’s decision being made public, I am not satisfied that the other aspect of the public interest, the public interest in the administration of criminal justice, or the harm to the Applicant’s reputation, are sufficient in this case to warrant the making of confidentiality orders sought under s 35(2) of the Act.
DECISION
The application for orders under sections 41(2) and 35(2) of the Administrative Appeals Tribunal Act 1975 is therefore refused.
I certify that the preceding 42 (forty -two) paragraphs are a true copy of the reasons for the decision herein of Deputy President RP Handley. ...............................[SGD].............................
Associate
Dated 16 August 2013
Date(s) of hearing 6 August 2013 Date final submissions received 6 August 2013 Counsel for the Applicant R Sutherland SC and R Hatfield Solicitors for the Applicant J Sutton, Armstrong Legal Solicitors for the Respondent R O'Shannessy, Australian Government Solicitors Counsel for the Joined Party GT Johnson SC Solicitors for the Joined Party R Hartmann, ASIC
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