MBA Auto Rental Pty Ltd and Australian Securities and Investments Commission (Practice and procedure) - [2024] ARTA 86

MBA Auto Rental Pty Ltd and Australian Securities and Investments Commission (Practice and procedure) [2024] ARTA 86 (20 December 2024)
Applicant/s:  MBA Auto Rental Pty Ltd
Respondent:  Australian Securities and Investments Commission
Tribunal Number:                2023/8063

Tribunal:General Member R Smith
Place:Adelaide
Date:20 December 2024

Decision:The Tribunal has jurisdiction to hear and determine the application for review.

....................[SGND]....................................................
General Member R Smith
Catchwords
INTERLOCUTORY APPLICATION – jurisdiction - application for review made pursuant to section 1317B of the Corporations Act 2001 (Cth) - order by Australian Securities and Investment Commission pursuant to section 588FGAA(3) of the Corporations Act 2001 –– whether an excluded decision under section 1317C of the Corporations Act 2001 – whether application to set aside an order under subsection 588FGAA(3) is in the nature of an appeal or review - jurisdiction to review
Legislation
Sections 12, 97 of the Administrative Review Act 2024 (Cth)
Sections 588FDB, 588FE, 588FGAA, 588GGAE 1317B,1317C, 1377D Corporations Act 2001 (Cth)
Cases
CPAC Residential Pty Ltd and Australian Securities and Investment Commission [2016] AATA 428
Harvey v Minister for Primary Industry and Resources [2024] HCA 1
Re Gallivan Investments Ltd and ASC (1991) 24 ALD 611
Shi v Migration Agents Registration Authority (2008) 235 CLR 286
Secondary Materials
Explanatory Memorandum to the Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019
Statement of Reasons

The Applicant, MBA Auto Rental Pty Ltd, filed an application with the Administrative Appeals Tribunal for a review of a decision of the Respondent to grant a request made by the liquidator of Ahrajco Pty Ltd A.C.N 165 237 918 (Ahrajco) seeking orders to undo the effect of a “creditor defeating disposition” of Ahrajco’s property.
The preliminary issue before the Tribunal is whether it has jurisdiction to review this decision. Following directions made by the Tribunal, the matter was listed for an interlocutory hearing. I have considered the detailed submissions provided by the Respondent which addressed both sides of the question. The Applicant declined to make submissions.
Although the question is finely balanced, I agree with the Respondent that the preferable view is that the Tribunal has jurisdiction.
BACKGROUND
The Applicant was incorporated on 27 October 2020 and Mr Mohammad-Baker Hussein Al Haiery is the sole director and shareholder.
The following background facts are repeated from the Statement of Facts, Issues and Contentions filed on behalf of the Respondent. They are uncontroversial and are included to give context to the jurisdictional issue.
Ahrajco was incorporated on 9 August 2013. Mr Rajeev Ukhal is the sole director and shareholder.
On 1 March 2022, Ahrajco and the Applicant entered into an asset sale agreement in which Ahrajco purported to transfer a 2012 Hino truck and a 2012 Nissan truck to the Applicant with a purchase price of $240,000. The payment for the trucks was to be effected by way of a set off of a number loans.
On 2 March 2023, the Return-to-Work Corporation of South Australia lodged an application under section 459A of the Corporations Act seeking an order that Ahrajco be wound up in insolvency.
The Department of Infrastructure and Transport’s vehicle register recorded that, in relation to the Hino truck, a Transfer of Registration to the Applicant was lodged on 30 March 2022 with an acquisition date of the same day. A Transfer of Registration was received for Nissan truck on 4 April 2022 with an acquisition date of 31 March 2022.
On 28 April 2022, Ahrajco was wound up by the order of the Federal Court. Mr Anthony Phillips was appointed liquidator (the Liquidator).
The Liquidator, during the course of his investigations, reported that Ahrajco did not receive any payment from the sale of the trucks. He also formed the view the assets sale agreement was not signed on 1 March 2022 but at a later time with the intention to defeat creditor claims.
On 4 January 2023, the Liquidator made a request to the Respondent for an order under section 588FGAA(3) of the Act, in relation to the disposition of the trucks by Ahrajco to the Applicant.
On 10 May 2023, the Respondent sent a letter to the Applicant advising that it was considering whether to make an order under section 588FGAA of the Act.
The Applicant provided written submissions on 6 July 2023 and further material on 17 July 2023 to the Respondent in relation to the Liquidator’s request.
On 29 August 2023, the Respondent’s delegate was satisfied that Ahrajco made a creditor defeating disposition of property in disposing of the trucks to the Applicant. The delegate was also satisfied having regard to the matters set out in subsections 588FGAA(4) and 588FGAA(5) of the Act that it was appropriate to make an order under section 588FGAA(3) against the Applicant.
The order made by Respondent was as follows:
On request under s588FGAA(2) of the Corporations Act 2001, the Australian and Securities Investments Commissioner makes an order under s588FGAA(3) of the Corporations Act that MBA Auto Rental Pty Ltd ACN 645 430 548 must pay to Ahrajco Pty Ltd (n liquidation) ACN 165 237 918, within 20 business days of being given this order, the amount of $216,133.16
On 31 October 2023, the Applicant filed an application for review of the decision of the Respondent to make the order, with the Administrative Appeals Tribunal.
On 24 May 2024, the Applicant filed with the Tribunal some further material in support of the application for review.
On 26 June 2024, the Respondent filed with the Tribunal a Statement of Facts Issues and Contentions. That document does not take issue with the jurisdiction of the Tribunal to hear and determine the review.
LEGISLATION
Creditor defeating transactions
The Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 (Cth) introduced a number of new provisions aimed at addressing “phoenixing” behaviour. These include prohibiting creditor defeating dispositions of company property and allowing the Respondent and liquidators to recover the property in a more efficient way and without the need for Court action.
A disposition of property of a company is a “creditor-defeating disposition” if the two conditions set out in s 588FDB(1)(a) and (b) of the Act are satisfied. The first condition requires that the consideration payable to the company for the disposition be less than the lower of the market value of the property and the best price reasonably obtainable for it, at the time of the disposition or at the time of any earlier relevant agreement[1] for the disposition.
[1] As defined in section 9 of the Act.
The second condition is that the disposition has the effect of either preventing the property from becoming available for the benefit of the creditors in the company’s winding up, or hindering or significantly delaying the process of making the property available for the benefit of the creditors in the winding up.
A creditordefeating disposition of property of a company is a voidable transaction under s 588FE(6B)(a) of the Act if one or more of the conditions stipulated in s 588FE(6B)(b) are satisfied. Those conditions impose a requirement that at the time of the transaction (or within an expressed timeframe from the transaction) the company was or became insolvent. Subsection 588FE(6B)(c) of the Act works to exclude transactions where the Court or the Australian Securities and Investments Commission has a role in overseeing the transaction.
Section 588FGAA of the Act gives the Respondent power to make administrative orders in response to a creditor-defeating disposition. The Respondent can, pursuant to section 588FGAA(3), make an order:
·directing a person to transfer to the company property that was the subject of the disposition, or;
·requiring the person to pay to the company an amount that in ASIC’s opinion represents some or all of the benefits that the person received because of the disposition, or;
·requiring the person to transfer to the company property that, in ASIC’s opinion, fairly represents the application of proceeds of property that was the subject of the disposition.
The Respondent may make any such order at the request of the company’s liquidator[2] or on its own initiative. In deciding whether to make any such order, the Respondent must have regard to the list of matters set out in section 588FGAA(5).
[2] if the request is made within the time limit set by section 588FGAA(2) of the Act.
The Respondent must not make an order if it has reason to believe that, if it were a Court, s 588FG would prevent it from making a corresponding order under s 588FF of the Act.
A Court may set aside an order under subsection 588FGAA(3) of the Act upon an application by a person subject to the order or any other interested person. The Court may set the order aside if satisfied, on the basis of the written reasons for the order, that s 588FGAA of the Act did not apply. If an order is set aside, it is taken never to have been made.
Review rights under the Act
Part 9.4A of the Act deals with the review of certain decisions by the Tribunal. Section 1317B(b) relevantly states that applications may be made to the Tribunal for a review of a decision made under the Act by the Respondent.
Section 1317C sets out the decisions to which s 1317B does not apply and are therefore excluded from review by the Tribunal. Subsection 1317C(a) specifically excludes “a decision in respect of which any provision in the nature of an appeal or review is expressly provided by this Act.”
The Administrative Review Tribunal Act2024
A person whose interests are affected by a reviewable decision may apply to the Tribunal for review of the decision.
Pursuant to section 12 of the Administrative Review Tribunal Act 2024 (ART Act), a decision is a reviewable decision if an Act or a legislative instrument provides for an application to be made to the Tribunal for review of the decision.
In other words, the Tribunal does not have a general power to review administrative decisions. It is necessary to look at the Act or instrument under which the decision is made.
If the Tribunal is satisfied that the decision is not reviewable by the Tribunal, it must dismiss the application for review. [3]
[3] Section 97 of the ART Act.
THE JURISDICTIONAL ISSUE
There is at present no decided authority on s 588FGAA of the Act by either a court or a tribunal.
For present purposes, the issue is whether the decision by the Respondent to make an order under s 588FGAA(3) of the Act is a decision expressly excluded from Tribunal review under s 1317B by section 1317C(a) of the Act.
Subsection 1317C(a) of the Act provides that section 1317B does not apply in relation to “a decision in respect of which any provision in the nature of an appeal or review is expressly provided by this Act”.
It is therefore necessary to determine whether s 588FGAE gives rise to a right in the nature of an appeal or a review. Should the Tribunal determine that it does, then the application for review must be dismissed.
CONSIDERATION OF THE ISSUE
The use of the phrase “nature of an appeal or review” would suggest that section 1317C(a) of the Act is intended to capture a process which, while not strictly an appeal or a review, has the essential quality or characteristics of an appeal or review.
The term “appeal” is defined as “an application for a new trial and a proceeding to review or call in question the proceedings, decision or jurisdiction of a court or a judge.”[4]
[4] Section 1337D.
An application for review in the context of the Act is made to the Tribunal. In conducting a review, the Tribunal may exercise all the powers of the original decision maker, including any discretionary power, to affirm, vary or substitute the original decision. Further, the Tribunal can review all of the facts, including new evidence to allow the correct or preferable decision to be made[5].
[5] Shi v Migration Agents Registration Authority (2008) 235 CLR 286
Section 588FGAE of the Act provides that any person subject to an order under subsection 588FGAA(3) may apply to the Court to have the order set aside. The section does not expressly characterise the application as either an appeal or a review of the decision of the Respondent to make the order.
Having regard to the definition in s 1337D, an essential character or quality of an appeal in the context of the Act, is that it involves an examination of a decision of a Court or a judge. Accordingly, s 588FGAE of the Act which deals with setting aside a decision of the Respondent (and not a decision of a judge or a Court) is not a provision in the nature of an appeal contemplated by s 1317C of the Act.
In Re Gallivan Investments Ltd and Australian Securities Commission (1991) 24 ALD 611, Deputy President McMahon considered the nature of the review contemplated by section 1317C(a) to have “…the capacity to modify or negative the original decision.”[6]
[6] Re Gallivan Investments Ltd and ASC 24 ALD 61 [21]
Section 588FGAE allows for an order to be set aside, which does have the “capacity” to “negative” the original decision. On the surface, it appears that it is the Court with the relevant authority and responsibility over s 588FGAA of the Act, effectively removing the Tribunals jurisdiction to conduct the review.[7]
[7] See the comments of Deputy President McCabe (as his Honour then was) in CPAC Residential Pty Ltd and Australian Securities and Investment Commission [2016] AATA 428 at 15
However, on deeper inspection, the Court’s power appears to be limited to where, on the basis of the Respondent’s written reasons for the order, the Court is satisfied that section 588FGAA does not apply. This implies the scope of any examination by the court is likely to be narrow, and the evidence and other material that may be considered as part of an application limited.
The language of s 588FGAE of the Act does not appear to empower the Court to set aside an order if section 588FGAA applies but the court is satisfied that the order should not have been made. There is also no power to make an order to vary the amount, terms or scope of the Respondent’s order. The Court is only empowered to set the order aside.
Given the limitations with respect to both the nature of any enquiry and power of the Court in respect of the decision, the rights conferred by section 588FGAE are not in the nature of a review.
Accordingly, although section 588FGAE provides for some external oversight of the administration of s 588FGAA, this is not in the nature of an appeal or review right.
This interpretation appears to be consistent with Parliament’s intention noting that the Explanatory Memorandum[8] provides as follows:
Applications to set aside administrative orders
2.63 A person may apply to the Court to have an administrative order set aside if the person believes the order has been made in error. Applications must be made within 60 days of the application receiving the notice or becoming aware of the administrative order. [Schedule 1, item 25, section 588FGAE of the Corporations Act 2001]
2.64 A person may also apply to the Administrative Appeal Tribunal in relation to ASICs decision to issue an administrative order (section 1317B)
[8] Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 (Cth), Explanatory Memorandum p25 25
The introduction of the reforms post- dates section 1317C of the Act. The fact that the rights conferred by section 588FGAE are not expressly stated as an appeal or a review is consistent with an objective intention that a decision to make an order under s 588FGAA is subject to review before the Tribunal.
Although the Explanatory memorandum does not have statutory force, this is a case where object of the provision is clearly expressed in the Explanatory Memorandum[9], being that a decision of the Respondent to make an order under s588FGAE of the Act may be the subject of an application for review by the Tribunal under s 1317B of the Act.
[9] Harvey v Minister for Primary Industry and Resources [2024] HCA 1, [119].
CONCLUSION
The Tribunal finds that it does have jurisdiction to hear and determine the application for review.
I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for the decision herein of General Member R Smith
……[SGND]………………………

Associate

Dated: 20 December 2024

Date(s) of hearing: 6 December 2024

Date final submissions received: 6 December 2024

Applicant: Mr Mohammad-Baker Hussein Al Haiery

Respondent:
Australian and Securities Investment Commission

Counsel for the Respondent: Mr Mark Douglas

Date(s) of hearing:	6 December 2024
Date final submissions received:	6 December 2024
Applicant:	Mr Mohammad-Baker Hussein Al Haiery
Respondent:	Australian and Securities Investment Commission
Counsel for the Respondent:	Mr Mark Douglas