MASU Financial Management Pty Ltd and Australian Securities and Investments Commission

[2016] AATA 380

Administrative Appeals Tribunal

ADMINISTRATIVE APPEALS TRIBUNAL              )

)         No: 2016/2180

Taxation and Commercial Division            )

Re: MASU Financial Management Pty Ltd

APPLICANT

And: Australian Securities & Investments Commission

RESPONDENT

DIRECTION

TRIBUNAL:              Professor R Deutsch, Deputy President

DATE:   7 June 2016

PLACE:                    Sydney

The Tribunal directs the Registrar, pursuant to subsection 43AA(1) of the Administrative Appeals Tribunal Act 1975, that the text of the decision in this application is to be altered such that the reference to “condition (1)” in paragraph (3) of the decision is replaced with “condition (2)”.

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Professor R Deutsch, Deputy President

MASU Financial Management Pty Ltd and Australian Securities and Investments Commission [2016] AATA 380 (20 May 2016)

Division	TAXATION & COMMERCIAL DIVISION
File Number(s)	2016/2180
Re	MASU Financial Management Pty Ltd
APPLICANT
And	Australian Securities and Investments Commission
RESPONDENT

Decision

Tribunal	Professor R Deutsch, Deputy President
Date	20 May 2016
Date of written reasons	7 June 2016
Place	Sydney

Pursuant to section 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth), the Tribunal orders that:

(1)   The operation of the Respondent’s decision of 26 April to suspend the Applicant’s license for a period of eight weeks is stayed until the decision of the Tribunal on the application for review comes into operation or until further order of the Tribunal;

(2)   Within three working days, MASU is to provide the following notification (the Suspension Notification) to all persons to whom MASU, or its principals, employees, directors or authorised representatives, provide financial services or have, since 26 April 2016, provided financial services (the Notification Class):

“On 26 April 2016, ASIC suspended the Australian financial services licence of MASU Financial Management Pty Ltd (MASU) under s 915C(1) of the Corporations Act because ASIC was satisfied that MASU had not complied with its obligations under s 912A of the Corporations Act and ASIC had reason to believe that MASU was likely to contravene its obligations under     s 912A. On 27 April 2016, MASU applied to the Administrative Appeals Tribunal for a review of ASIC’s decision. The Tribunal has granted a stay of the suspension pending a final decision, such that MASU and its principals, employees, directors and authorised representatives can continue to provide financial services until a final decision is made. The Tribunal directed that MASU provide this notification as a condition of granting the stay.”

(3)   Within 24 hours of providing the Suspension Notification in accordance with condition (1), MASU is to provide evidence to ASIC that it has provided the Suspension Notification to the Notification Class.

(4)   For so long as the stay is pending, MASU is to provide the Suspension Notification to all persons to whom MASU, or its principals, employees, directors or authorised representatives, provide or propose to provide financial services.

.................................[sgd].......................................

Professor R Deutsch, Deputy President

Catchwords

STAY APPLICATION – application to stay decision of ASIC – decision suspended applicant’s financial service license – prospects of success – stay granted with conditions

Legislation

Administrative Appeals Tribunal Act1975 (Cth) s 41(6)

Cases

ReScott v ASIC (2009) 51 AAR 114

REASONS FOR DECISION

Professor R Deutsch, Deputy President

7 June 2016

1. This is the matter of MASU Financial Management Pty Ltd and Australian Securities and Investments Commission (ASIC). It is an application seeking a stay order, and this is my decision in relation to this matter.

2. Having regard to the various factors that I am asked to take into account in determining whether an application for a stay order should be granted, I have reached the conclusion after much deliberation that, in this case, a stay would be appropriate, although it will be conditions as suggested by ASIC.

3. In reaching this decision I have had regard to a number of matters, most particularly those that are referred to in the cases that require me to take into account a number of matters.  In particular, I have in mind ReScott v ASIC (2009) 51 AAR 114, where the following matters are mentioned as being particularly of relevance:

   ·prospects of success;

   ·the consequences for the applicant of the refusal of a stay;

   ·the public interest;

   ·the consequences for ASIC in carrying out its functions depending upon whether a stay is granted or not;

   ·whether the application for review would be rendered nugatory if a stay were not granted; and

   ·any other relevant factors including, in particular, the length of time that has passed since the decision and how long it is likely to take for the final application to be determined by the Tribunal.

4. In this case, I have paid particular attention to the prospects of success, but as I have said on many previous occasions in similar cases, evaluating prospects of success based on very preliminary evidence is a difficult matter that is fraught with danger.  Nonetheless, I have had to make an evaluation of that. Most particularly, I would mention at this stage that I do not find what the Applicant has put to me to be in any way frivolous or without foundation.  They have clearly taken a number of steps to try and correct the deficiencies that have been identified by ASIC.  Whether or not those steps are sufficient will be revealed in the fullness of time by the evidence that will be brought before the Tribunal, but for the moment, I am of the opinion that they have some reasonable prospects of success.  I will not go any further than that at this stage.

5. In relation to the other matters, I will not go into detail in this oral decision, but I have taken into account all those other matters and, on balance, I am satisfied that a stay is appropriate in the circumstances. 

6. However, I have had to take into account the concerns of ASIC, and in doing so, I accept that it is appropriate that there should be conditions imposed in relation to the stay application and the conditions that I propose to impose under s 41(6) of the Administrative Appeals Tribunal Act1975 (Cth) are set out in paragraph 40 of the Respondent’s outline of submissions. The three-pronged conditions are as follows:

   (1)  Within three days, MASU is to provide the following notification (the Suspension Notification) to all persons to whom MASU, or its principals, employees, directors or authorised representatives, provide financial services or have since 26 April 2016 provided financial services (the Notification Class): 

   “On 26 April 2016, ASIC suspended the Australian financial services licence of MASU Financial Management Pty Limited (MASU) under s 915C(1) of the Corporations Act because ASIC was satisfied that MASU had not complied with its obligations under s 912A of the Corporations Act and ASIC had reason to believe that MASU was likely to contravene its obligations under s 912A. On 27 April 2016, MASU applied to the Administrative Appeals Tribunal for a review of ASIC’s decision.  The Tribunal has granted a stay of the suspension pending a final decision such that MASU and its principals, employees, directors and authorised representatives can continue to provide financial services until a final decision is made.  The Tribunal directed that MASU provide this notification as a condition of granting the stay.”

   (2)  Within 24 hours of providing the Suspension Notification in accordance with condition (1), MASU is to provide evidence to ASIC that it has provided the Suspension Notification to the Notification Class.

   (3)  For so long as the stay is pending, MASU is to provide the Suspension Notification to all persons to whom MASU, or its principles, employees, directors or authorised representatives, provide or propose to provide financial services. 

I certify that the preceding 6 (six) paragraphs are a true copy of the reasons for the decision herein of Professor R Deutsch, Deputy President

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Associate

Dated 7 June 2016

Date(s) of hearing	20 May 2016
Counsel for the Applicant	Terrance Lynch SC, Michael Klooster
Counsel for the Respondent	Stephen Lloyd SC, David Hume