Nickson and Australian Securities and Investments Commission
[2005] AATA 859
•25 August 2005
CATCHWORDS – CORPORATIONS – jurisdiction – ASIC’s refusal to investigate complaints against directors and administrator – whether refusal reviewable – whether relevant provisions specify functions or confer powers on ASIC – identification of provisions under which ASIC made a decision – whether a decision under those provisions reviewable – no jurisdiction.
Acts Interpretation Act 1901 s. 33
Administrative Appeals Tribunal Act 1975 ss. 3, 25 and 28
Administrative Decisions (Judicial Review) Act 1977 s. 3
Australian Securities and Investments Commission Act 2001 ss. 5, 11, 13, 71, 72, 73, 75, 148, and 244
Australian Securities Commission Act 1989 ss. 28 and 30
Corporations Act 2001 ss. 323EH, 533, 536, 601AB, 601AC, 601CC, 601CL, 657C, 1292, 1317B and 1317C
Corporations Law ss. 597, 1292 and 1294
Income Tax Assessment Act 1936 s. 8
Judiciary Act 1903 s. 39B
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; 94 ALR 11
Coopers & Lybrand v Australian Securities Commission (1994) 53 FCR 599; 126 ALR 465
Creswick v Australian Securities Commission [1993] FCA 272; NG 3161 of 1992
Hongkong Bank of Australia Ltd and Another v Australian Securities Commission (1992) 40 FCR 402; 108 ALR 70
Mercantile Mutual Insurance v Australian Securities Commission (1993) 40 FCR 409; 112 ALR 463
Re Morton and Australian Securities Commission (1997) 23 ACSR 454
Re Rich and Australian Securities and Investments Commission [2003] AATA 1044
Schokker & Anor v Federal Commissioner of Taxation (1996) 96 ATC 4885
DECISION AND REASONS FOR DECISION [2005] AATA 859
ADMINISTRATIVE APPEALS TRIBUNAL )
) V2005/545
GENERAL ADMINISTRATIVE DIVISION )
Re PETER CHARLES NICKSON
Applicant
AndAustralian Securities and InvestmentS Commission
Respondent
DECISION
Tribunal: Deputy President S A Forgie
Date: 25 August 2005
Place: Melbourne
Decision:The Tribunal does not have jurisdiction to review the decisions made by the respondent on 10 February 2005.
S A FORGIE
Deputy President
REASONS FOR DECISION
Mr Nickson has complained to the respondent, the Australian Securities and Investments Commission (“ASIC”), about the actions of the directors and the Administrator, Mr McLellan, of the EPCA Group Pty Ltd (“EPCA Group”). In a letter dated 10 February 2005, ASIC declined to take any action against the directors before it had received a report from Mr McLellan under s. 533 of the Corporations Act 2001 (“Act”). It also decided that Mr McLellan’s actions did not require regulatory intervention at that time. Mr Nickson has asked the Tribunal to review ASIC’s decisions. The Tribunal may do so if ASIC has made a decision under one of the sections specified either in s. 1317B, and not excluded by s. 1317C the Act, or in s. 244(2) of the Australian Securities and Investments Commission Act 2001 (“ASIC Act”). I have decided that, in some circumstances, ASIC’s decision not to take action under a specified section may be a decision that is made under that section and so reviewable by the Tribunal. In this case, though, I have decided that ASIC’s decisions were made under s. 11(4) of the ASIC Act. As that is not a section specified in s. 244(2), they are not reviewable by the Tribunal.
BACKGROUND
The only evidence that I have in this case is that given by Mr Nickson. He has questioned the actions of others. Those people have not been given an opportunity to present their views and, given the nature of the issue that I must resolve, it is not necessary that they be given that opportunity. I emphasise, therefore, that the findings of fact that I set out in the following paragraphs have been made solely for the purposes of resolving the jurisdictional question in this case. Whether or not they would be the findings of fact I would make after all interested parties had presented their evidence must necessarily be a matter for conjecture.
Mr Nickson was a director, shareholder, employee and sole manager of Engineering Plastics Compounding Australia Pty Ltd and of its successor, the EPCA Group Pty Ltd (“EPCA Group”), from 7 November 1997 until 19 April 2004. Mr Nickson held 331/3% of the shares in the EPCA Group and Mr Tomassi held the remaining 662/3% of the shares. For the first six years, Mr Tomassi had been a silent partner in the EPCA Group and Mr Nickson had operated it on a day to day basis. In April 2003, Mr Nickson and Mr Tomassi agreed to employ Mr Tomassi’s son in law, Mr Mark Scacco. Later, Mr Tomassi transferred 6% of his shares to Mr Scacco.
In June 2003, Mr Tomassi advised Mr Nickson that he wished to be employed by the EPCA Group as its Sales and Marketing Manager. Mr Nickson told him that there was no vacancies and that, in any event, Mr Scacco was not fully employed. After discussing the issue, Mr Nickson and Mr Tomassi agreed that the company would employ Mr Tomassi if he could raise its sales sufficiently to cover his salary and expenses. Mr Tomassi commenced employment at the end of June 2003.
Mr Nickson monitored the EPCA Group’s sales. When, after six months, there was no noticeable improvement in those sales, Mr Nickson recommended to the company’s Management Committee that there be some changes as it was losing money. The Management Committee deferred making any decision. At the end of March 2004, Mr Nickson produced a document comparing the sales for the first nine months of each of the 2003 and 2004 financial years. If his own sales were excluded, Mr Nickson advised the Management Committee, there had been no improvement in the EPCA Group’s sales. His relationship with Mr Tomassi, which had already begun to deteriorate, worsened further. On 19 April 2004, he was removed as a director following a shareholders’ meeting.
On 3 June 2004, Mr Tomassi changed the locks on the EPCA Group’s premises so that Mr Nickson could not gain access. Mr Nickson was given notice that his employment had been terminated and his personal computer was sent to him at his home address. Mr Nickson engaged lawyers to negotiate with the EPCA Group but without success. He began proceedings in the Australian Industrial Relations Commission to obtain payment of his outstanding employee benefits and in the Supreme Court of Victoria to obtain repayment of his Director’s Loan Account.
On 9 September 2004, the directors of the EPCA Group appointed an Administrator, Mr Andrew McLellan, and the company ceased trading. On the basis of his own investigations, Mr Nickson is satisfied that the EPCA Group is not insolvent and could continue to trade. He has told the Administrator of his views and has offered to manage the company in administration. In addition, he has “… offered to suspend legal action until the issues are resolved.”[1] Mr Nickson believes that the Administrator was appointed solely in order to prevent him from taking action.
[1] ecomplaint made to ASIC on 19 September 2004
Mr Nickson stated that Mr Patrick Ciccaldo has registered a company called Olima Fibre Processors Pty Ltd (“OFP”) on 19 August 2004. OFP’s business address is identical to that used by the EPCA Group. Mr Nickson has observed Mr Tomassi and Mr Scacco working on the premises and using what he believes are the EPCA Group’s assets. Mr Nickson believes that Mr Tomassi has written to customers of the EPCA Group telling them that the company has ceased to trade and that OFP began to trade on 10 September 2004. He also believes that OFP is providing Fibremakers Australia Pty Ltd (“Fibremakers”) with the services formerly provided by the EPCA Group.
OFP has placed those of the EPCA Group’s assets that it is not using in a building rented by the EPCA Group. Mr McLellan has locked that building and it is under his control. If the EPCA Group were to resume trading, Mr Nickson believes, it would be necessary to regain control of the building now occupied by OFP and ensure that the agreement between it, the EPCA Group, and Fibremakers was still in place. He believes that Mr McLellan could easily negotiate the continuation of the contract.
In an ecomplaint made to ASIC on 19 September 2004, Mr Nickson said that he believed that Mr Tomassi and Mr Scacco might be contravening the law in the following ways:
“1. Failing to operate in EPCA Groups[sic] shareholders best interests. Deliberately harming the Company.
2.Using information available to them in their positions in EPCA Group to gain directly an advantage for themselves or Mr Patrick Ciccaldo.
3.Setting up a dummy Director whilst managing Olima Fibre Processors themselves.
4.Failing to complete form 485 within seven days after the end of the two-month period following the review date.”[2]
[2] ecomplaint made to ASIC on 19 September 2004
ASIC responded to Mr Nickson’s concerns in this way:
In relation to his concerns about the conduct of the directors of the EPCA Group before Mr McLellan’s appointment as Administrator, it thought it appropriate to wait for his report under s. 533 of the Act. Generally, such a report is not made available to the public and it is ASIC’s policy not to disclose whether such a report has been lodged in an administration. It is up to Mr McLellan as to whether he wishes to disclose details of any report he may lodge with ASIC or the outcome of ASIC’s consideration of such a report to the creditors.
In relation to his concerns about the conduct of Mr McLellan, ASIC decided that, on the information available to it, his conduct did not require regulatory intervention at that time. In order to refer the matter to the Companies Auditors and Liquidators Disciplinary Board (“CALD Board”) for its consideration, ASIC would need to have sufficient reliable evidence of an administrator’s serious misconduct.
ASIC would take no further action.[3]
[3] ASIC’s letter dated 10 February 2005 to Mr Nickson
Mr Nickson responded in a letter dated 13 February 2005 setting out careful details of his allegations of impropriety by the directors of the EPCA Group and failures and inadequacies of Mr McLellan in his administration. In a letter dated 7 March 2005, ASIC confirmed its earlier position in relation to his allegations stating that its consideration was complete.
THE LEGISLATIVE FRAMEWORK
Provisions relating to the Tribunal’s jurisdiction
Unlike a court of general jurisdiction which may consider all matters that come before it for trial, the Tribunal’s jurisdiction is limited. The first limitation imposed on its jurisdiction is that it may review only decisions made in the exercise of powers conferred by an enactment. That is the effect of ss. 25(1) of the Administrative Appeals Tribunal Act 1975 (“AAT Act”). An “enactment” includes an Act or an instrument, such as regulations or by-laws, made under an Act.[4] A “decision” is broadly defined in s. 3(3).[5] The second limitation is that the “… Tribunal has power to review any decision in respect of which application is made to it under any enactment.”[6] Implicit in the provision is that the Tribunal does not have jurisdiction if a decision does not conform to these two limitations. Therefore, in order to have jurisdiction, the Tribunal must find an enactment that provides that an application may be made to it.
[4] AAT Act, s. 3(1)
[5] Section 3(3) of the AAT Act provides that the word “decision” includes a reference to:[6] AAT Act, s. 25(4)
The AAT Act itself is not such an enactment. Section 25(1) simply provides that other enactments may make such a provision. It states:
“An enactment may provide that applications may be made to the Tribunal:
(a)for review of decisions made in 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.”
The Act is such an enactment. It provides that applications may be made to the Tribunal. That is provided for in s. 1317B(1) which states that:
“Subject to this Part, applications may be made to the Tribunal for review of a decision made under this Act by:
(a) the Minister;
(b) ASIC; or
(c) the Companies Auditors and Liquidators Disciplinary Board.”
Section 1317C excludes certain decisions from the application of s. 1317B(1) but those exclusions are not relevant in this case.
The ASIC Act is another such enactment. Section 244(2) provides that applications may be made to the Tribunal for review of a decision made by the Commission to make orders under ss. 72 or 73, to make an order under s. 75(1) varying an order under Division 8 of Part 3 or to refuse to vary or revoke an order in force under that Division. Sections 72 and 73 refer to s. 71 and all three sections come within Division 8 of Part 3. The effect of s. 71 is that ss. 72 and 73 come into play when two factors apply: first, in ASIC’s opinion, information about the affairs of a body corporate or about financial products needs to be found so that it can exercise its powers; and second, it cannot find out that information because a person has failed to comply with a requirement to do so under Part 3 of the ASIC Act. Section 72 gives ASIC power to make certain orders when the information it needs but does not have relates to the affairs of a body corporate. Section 73 gives it powers to make other orders when the information relates to financial products. Section 75(1) provides that ASIC may make an order varying or revoking an order that has been made and specifies certain procedural steps that must be followed.
A selection of provisions relating to ASIC’s powers and functions
Section 11 the ASIC Act provides that:
“ASIC has such functions and powers as are conferred on it by or under the corporations legislation (other than the excluded provisions).”
Further functions are conferred by s. 11(2) and include functions to provide staff and support facilities to certain bodies and to advise the Minister on certain matters. Section 11(3) provides that ASIC may, either on its own initiative or when requested by the Minister, advise him or her and make recommendations about any matter of a kind referred to in s. 148.[7]
[7] Section 148 of the ASIC Act provides that CAMAC’s functions are to advise the Minister about any matter connected with, expressed in general terms, the operation, administration and amendment of the corporations legislation, companies or a segment of the financial services industry or financial products and improving the efficiency of financial markets.
Section 11(4) of the ASIC Act provides that:
“ASIC has power to do whatever is necessary for or in connection with, or reasonably incidental to, the performance of its functions.”
Section 11(6) provides that ASIC has, subject to the ASIC Act itself, the general administration of the Act. It may enter an agreement with a State or Territory and agree to perform functions or exercise powers as an agent of that State or Territory[8] or the law of a State or Territory may confer functions or powers on it.[9]
[8] ASIC Act, s. 11(8)-11(9)
[9] ASIC Act, s. 11(9A)
ASIC is given powers of investigation by s. 13 of the ASIC Act but the power is given by reference to three sets of circumstances and its parameters are circumscribed by reference to those circumstances:
where it has reason to suspect that there has been a contravention of the corporations legislation or of a law[10] concerning the management or affairs of a body corporate or managed investment scheme or involving fraud or dishonesty and relating to a body corporate, managed investment scheme or financial products “ASIC may make such investigation as it thinks expedient for the due administration of the corporations legislation[[11]] (other than the excluded provisions) …”;[12]
where it has reason to suspect that unacceptable circumstances have, or might have, occurred,[13] ASIC may make such investigation as it thinks expedient for determining whether or not to make an application under s. 657C of the Act or otherwise for the due administration of the corporations legislation;[14] and
where ASIC has reason to suspect that there has been a contravention of Division 2 of Part 2 of the ASIC Act,[15] ASIC may make such investigation as it thinks fit.[16]
[10] That law may be a law of the Commonwealth, a State or a Territory: ASIC Act, s. 13(1)(b).
[11] i.e. the ASIC Act or the Act: ASIC Act, s. 5(1)
[12] ASIC Act, s. 13(1)
[13] ASIC Act. 13(2) refers to “unacceptable circumstances within the meaning of Subdivision B of Division A of Part 6.12 of the Corporations Act”. There is, and never has been, a Part 6.12 of the Corporations Act. It would seem that s. 13(2) is intended to refer to Part 6.10 as Subdivision B of Division 2 of that Part is concerned with unacceptable circumstances and the circumstances in which the Takeovers Panel may declare circumstances to be unacceptable circumstances.
[14] ASIC Act, s. 13(2)
[15] Division 2 of Part 2 relates to unconscionable conduct and consumer protection in relation to financial services.
[16] ASIC Act, s. 13(6)
Section 536 of the Act was also raised during submissions. It concerns the supervision of liquidators, which is a term used to include provisional liquidators in that section.[17] The section goes on to provide:
[17] Act, s. 536(1A)
“(1) Where:
(a)it appears to the Court or to ASIC that a liquidator has not faithfully performed or is not faithfully performing his or her duties or has not observed or is not observing:
(i)a requirement of the Court; or
(ii)a requirement of this Act, of the regulations or of the rules; or
(b)a complaint is made to the Court or to ASIC by any person with respect to the conduct of a liquidator in connection with the performance of his or her duties;
the Court or ASIC, as the case may be, may inquire into the matter and, where the Court or ASIC so inquires, the Court may take such action as it thinks fit.
(2) ASIC may report to the Court any matter that in its opinion is a misfeasance, neglect or omission on the part of the liquidator and the Court may order the liquidator to make good any loss that the estate of the company has sustained thereby and may make such other order or orders as it thinks fit.
(3) The Court may at any time require a liquidator to answer any inquiry in relation to the winding up and may examine the liquidator or any other person on oath concerning the winding up and may direct an investigation to be made of the books of the liquidator.”
A further section that may be relevant is s. 1292(2) relating to the powers of the CALD Board:
“The Board may, if it is satisfied on an application by ASIC for a person who is registered as a liquidator to be dealt with under this section that, before, at or after the commencement of this section:
(a)the person has:
(i)contravened section 1288; or
(ii)ceased to be resident in Australia; or
(d)that the person has failed, whether in or outside this jurisdiction, to carry out or perform adequately and properly:
(i)the duties of a liquidator; or
(ii)any duties or functions required by an Australian law to be carried out or performed by a registered liquidator;
or is otherwise not a fit and proper person to remain registered as a liquidator;
by order, cancel, or suspend for a specified period, the registration of the person as a liquidator.”
CONSIDERATION
In making its decisions of 10 February 2005, ASIC did not refer to any statutory provisions. As the Tribunal’s jurisdiction is dependent upon ASIC’s having made a decision under a particular statutory provision and decisions under that provision being reviewable by it, I have considered the matter by reference to the provisions of the Act and the ASIC Act under which it could have made them.
The meaning of “decision”
In essence, the decisions made by ASIC in this case are decisions not to take any action. The definition of the word “decision” in s. 3(3) of the AAT Act is drafted in terms wide enough to encompass decisions “doing or refusing to do any act or thing.”[18] A similar, but not identical, definition of the word “decision” appears in the Administrative Decisions (Judicial Review) Act 1977 (“ADJR Act”).[19] Similar to, but again not identical, with the AAT Act, the ADJR Act is centred on a “decision to which this Act applies”. The ADJR Act defines that term to mean, in part, “… a decision of an administrative character made, or proposed to be made, or required to be made (whether in the exercise of a discretion or not …) … under an enactment.”[20]
[18] AAT Act, s. 3(3)
[19] The definition in s. 3(2) of the ADJR Act adds a reference to a “failure to make a decision”.
[20] ADJR Act, s. 3(1)
It was in the context of the ADJR Act that the High Court considered the meaning of “decision” in Australian Broadcasting Tribunal v Bond.[21] Some of the principles set out in that case and that are relevant in considering the meaning of a “decision” in the AAT Act include:
“a reviewable ‘decision’ is one for which provision is made by or under a statute. …”;[22]
“Another essential quality of a reviewable decision is that it be a substantive determination. …”;[23]
“… the reference in the definition in s. 3(1) to ‘a decision of an administrative character made … under an enactment’ indicates that a reviewable decision is a decision which a statute requires or authorizes rather than merely a step taken in the course of reasoning on the way to the making of the ultimate decision. …”;[24]
“… That will generally, but not always, entail a decision which is final or operative and determinative, at least in a practical sense, of the issue of fact falling for consideration. …”;[25]
“… A conclusion reached as a step along the way in a course of reasoning leading to an ultimate decision would not ordinarily amount to a reviewable decision, unless the statute provided for the making of a finding or ruling on that point so that the decision, though an intermediate decision, might accurately be described as a decision under an enactment.”;[26] and
a reviewable decision need not be one which ultimately determined all of the issues but it is implicit in the judgment of Mason CJ, with whom Brennan J concurred, that the decision would need to resolve “… an important issue to be determined before the ultimate decision could be made …”.[27]
[21] (1990) 170 CLR 321; 94 ALR 11
[22] (1990) 170 CLR 321; 94 ALR 11 at 337; 23 per Mason CJ with whom Brennan J concurred
[23] (1990) 170 CLR 321; 94 ALR 11 at 337; 24 per Mason CJ
[24] (1990) 170 CLR 321; 94 ALR 11 at 336; 23 per Mason CJ
[25] (1990) 170 CLR 321; 94 ALR 11 at 337; 23 per Mason CJ
[26] (1990) 170 CLR 321; 94 ALR 11 at 337; 23 per Mason CJ
[27] (1990) 170 CLR 321; 94 ALR 11 at 338; 24 per Mason CJ citing as an example a decision of a magistrate to commit a person for trial: Lamb v Moss (1983) 76 FLR 296; 49 ALR 533
Authorities considering whether a decision is made under an enactment.
The authorities to which Ms Hubble of counsel for ASIC referred were restricted to those concerned with the Act, or its predecessor the Corporations Law (“Law”), or the ASIC Act. Before turning to them, I will set out some other authorities considering the same issue in relation to enactments other than the Act or the ASIC Act. In Re Morton and Australian Securities Commission,[28] I examined a range of cases that had considered the issue:
[28] (1997) 23 ACSR 454
“24. What is meant by ‘under an enactment’ was dealt with in the earlier case of Australian National University v Burns (1982) 43 ALR 25, Bowen CJ and Lockhart J said:
The difficulty in the present case does not lie in the definition of the expression ‘under an enactment’. We agree with Fox J who said in Evans v Freimann (1981) 35 ALR 428 at 436; 3 ALD 326 at 333, that the word ‘under’, in the context of the Judicial Review Act, connotes ‘in pursuance of’ or ‘under the authority of’: see also R v Clyne [1941] VLR 200. The difficulty lies in the application of the expression to particular circumstances. The present case poses the problem in an acute form. (at 31)
This passage has since been adopted in other cases such as Chittick v Ackland (1984) 1 FCR 254; 53 ALR 143 at 153 (per Lockhart and Morling JJ) and referred to in cases such as Lewins v Australian National University (1995) 133 ALR 452 at 461.
25. Bowen CJ and Lockhart J also adopted the words of Ellicott J, from whose judgment the appeal had been taken, when he had said:
The clear object of the Act is to confer rights on aggrieved citizens as a result of the exercise of powers conferred by an enactment on Ministers, public servants, statutory authorities and others. In many cases the power to do a particular thing will be precisely stated in the legislation. In other cases the power to do a particular thing will be found in a broadly stated power. The Act should not be confined to cases where the particular power is precisely stated. In each case, the question to be asked is one of substance, whether, in effect, the decision is ‘made under an enactment’ or otherwise. (at 31, (1982) 40 ALR 707 at 716-717)
26. Applying the principles to the facts of the case before them, Bowen CJ and Lockhart J said:
In our opinion the rights and duties of the parties to the contract of engagement were derived under the contract and not under the University Act. Section 23 [of the Australian National University Act 1946] empowered the council to enter into the contract on behalf of the appellant. Even if the council, in considering the position of the appellant under the contract, might be said to be acting under section 23, the effective decision for dismissal taken and notified to the respondent was directly under the contract. (at 32)
27. In Australian National Airlines Commission v Newman (1987) 162 CLR 466; 70 ALR 275, the High Court found that the Australian National Airline Commission’s conduct of a kitchen was not something ‘done or purporting to be done’ under the Australian National Airlines Act 1945 (Cth). As Brennan J said:
In the present case, the Commission required no statutory authority to conduct a kitchen. That is an activity which, so far as appears, might lawfully be engaged in without statutory authority. The Commission was at liberty to perform the functions prescribed by s 19(1) or by other provisions of the Act by whatever lawful means it chose, and no further grant of power or prescription of functions was needed to authorise the conduct of the kitchen. True it is that the Act expressly confers powers on the Commission to operate services and facilities for the purposes of and incidental to the carrying on of its business (s 19D) and to do ‘all things necessary or convenient to be done for or in connection with, or as incidental to, the performance of its functions’ (s 19H(1)) but the Act is not to be regarded, for the purpose of s 63(1), as the source of power which the commission otherwise possesses. Freedom under the common law to engage in conduct requires no grant of statutory power to confirm it, and a limitation provision which affects liability for things done or purportedly done ‘under’ the statute does not affect liability for things which are and can be done without reliance on a statutory power to do them. The conduct of the kitchen was something which the Commission had capacity to undertake without the grant of statutory power to undertake it. It follows that an act committed in the course of conducting the kitchen is not an act arising out of something done or purportedly done under the Act for the purpose of s 63(1). (at 282-3)
28. The General Newspapers case was concerned, in part, with whether Telstra’s actions in negotiating the printing of its telephone directories or its decision to enter a contract with printers without calling for tenders was reviewable under the ADJR Act. In their joint judgement, Davies and Einfeld JJ reviewed a number of the authorities and continued:
In the present case, the decisions relied upon involved the entry of contracts and the conduct challenged was conduct leading to the making of the contracts. No statute made specific provisions for such contracts, merely conferring upon Telecom all the powers of a natural person including the power to enter into a contract. That was a mere conferral of capacity to act. The contracts were not relevantly authorised or required by and were not made under an enactment. The validity of the contracts and of the acts done was governed entirely by the law of contract, not by the statutes. Thus, the ADJR Act had no application to the conduct or to the alleged decision. (at 637)
29. Nicholson J’s judgment in Schokker v FCT was referred to by Mr Morton. The applicants sought review of a decision not to prosecute staff of the Australian Taxation Office for alleged breaches of the secrecy provisions in s 16 of the Income Tax Assessment Act 1936 (Cth) (the ITA Act). Nicholson J reviewed the ITA Act and found that prosecutions for a taxation offence are either instituted by or on behalf of the Commissioner of Taxation. It follows that he must make a decision under that legislation as to whether or not a prosecution should be brought.
30. A similar approach can be said to have been taken by Jenkinson J in Terrule Pty Ltd v DCT (1985) 5 FCR 153, Jenkinson J decided that a decision by a Deputy Commissioner of Taxation to institute proceedings for the recovery of income tax was a decision of an administrative character made under an enactment. He found that s 209 of the ITA Act conferred upon the Commissioner of Taxation the power to take those proceedings and also the power to decline to take them.
31. Some years later, Jenkinson J considered whether a decision by a Deputy Commissioner of Taxation to vote against a motion at a creditors’ meeting held under the Bankruptcy Act 1966 (Cth) was a decision under the ITA Act and, in particular, under s 8 or s 209. He did so in Hutchins v DCT (1994) 123 ALR 133; 29 ATR 52.
32. Section 8 of the ITA Act provided that the Commissioner of Taxation had the general administration of the legislation. Jenkinson J decided that a general power cannot be understood to make provision for any of the many decisions which the Commissioner must make in exercising his authority. The function of the section, he said, is merely to nominate the person by whom decisions relating to general administration may be made. Section 209 provided that the Commissioner or a Deputy Commissioner could sue for and recover unpaid tax. Section 208 provided that, when income tax becomes due and payable, it is a debt due to the Commonwealth.
33. His Honour referred to his earlier judgement in Terrule and doubted its correctness. He said:
I see more force now than when I rejected it in the submission of counsel for the Deputy Commissioner in Terrule’s case that s 209 did not make provision for decisions of that character but merely authorised suit by the Commonwealth for recovery of income tax by the Commissioner or a deputy commissioner suing in his official name, and that no other section of the Income Tax Assessment Act 1936 made provision for such a decision. I have already given my reasons for thinking that s 8 does not make that provision. On the view for which counsel for the Deputy Commissioner contended in Terrule’s case the decision whether or not to institute the suit for recovery of the tax is an exercise of the executive power of the Commonwealth conferred by s 61 of the Constitution. (at 139)
34. An appeal from Jenkinson J’s judgement was dismissed by the Full Court of the Federal Court in Hutchins v Deputy FCT (1996) 136 ALR 153; 96 ATC 4372. The majority, Black CJ and Spender J, concluded that s 8 was expressed too generally and that ss 208 and 209 were too remote and non specific to support a conclusion that the decision had been made under an enactment. Lockhart J disagreed on this aspect.”[29]
[29] (1997) 23 ACSR 454 at 460-462
Although expressed in different contexts, these authorities are applying common principles. One is that a general power of administration given in an enactment to a person or a body, such as that given to the Commissioner in s. 8 of the Income Tax Assessment Act 1936 (“ITA Act”), cannot be regarded as the statutory basis of every decision that is made by that person or body. Some decisions have their foundation in contract, for example, or under a specific head of power in the same enactment or another. At the same time, there need not be a specific head of power in an enactment authorising an action in order for an action to be said to have been made under that enactment. If a decision is made under an enactment, what seems to be required is that there be a link of substance between what is done and the powers that are given under the enactment. In the case of a prosecution under s. 16 of the ITA Act for alleged breaches of its secrecy provisions, for example, the fact that they must be instituted either by or on behalf of the Commissioner provides the necessary link of substance between the subject matter of the decision and the power to prosecute so that the decision not to prosecute may be said to have been made under the ITA Act: Schokker & Anor v Federal Commissioner of Taxation.[30]
[30] (1996) 96 ATC 4885
Authorities considering whether a decision is made under the ASIC Act or the Act
ASIC has refused to take any action regarding Mr Nickson’s allegations. As I have said, a refusal may be a decision within the meaning of s. 3(3) of the AAT Act. Whether or not it is reviewable depends upon whether ASIC was required or authorised to refuse to take that action and its decision to do so is reviewable under either s. 1317B(1) of the Act or s. 244(2) of the ASIC Act.
Does the fact that s. 13 gives ASIC a power to undertake investigations mean that its decision whether or not to investigate a matter falling within its scope is a decision made under that section? Equally, is a decision to refuse to investigate a matter that might be thought to fall within its scope a decision made under that section. Questions of this sort have been answered in the past by the Federal Court in relation to other sections of the ASIC Act and the Act as well as its predecessor, the Law. I will consider them first.
The case of Hongkong Bank of Australia Ltd v Australian Securities Commission[31] required a consideration of the now repealed s. 597 of the Law. Section 597(2) provided that “Where it appears to the Commission or to a prescribed person …[that certain events had occurred] the Commission or prescribed person may apply to the Court for an order under this section in relation to the person.” What was a “prescribed person” was the subject of s. 597(1). It provided that:
“In this section, a reference, in relation to a corporation, to a prescribed person, is a reference to an official manager, liquidator or provisional liquidator of the corporation or to any other person authorised by the Commission to make applications under this section or to make an application under this section in relation to that corporation.”
[31] (1992) 40 FCR 402; 108 ALR 70
Messrs Murphy and Allen were the new trustees of Estate Mortgage Trusts and the then Australian Securities Commission (“ASC”) authorised them to apply to the Supreme Court of New South Wales for an order in relation to the previous trustees, Burns Philp Trustee Co Limited. As such, they were the prescribed person within the meaning of s. 597(1). The orders were obtained and required the examination of two persons and the production of records by them and by the appellants in the case.
The appellants then applied to this tribunal for a review of the ASC’s decision to authorise Messrs Murphy and Allen, to make that application. The tribunal decided that it had no jurisdiction. On appeal, the Full Court of the Federal Court[32] looked first to whether the decision to authorise Messrs Murphy and Allen was a decision in respect of which an enactment provides for an application for review by the tribunal within the meaning of s. 25 of the AAT Act.
[32] Lockhart, Gummow and O’Connor JJ
It decided that it was not such a decision for the decision to authorise Messrs Murphy and Allen had been made under the incidental power in s. 11(4) of what is now the renamed ASIC Act. That was the provision that gave the ASC the power to authorise them. Section 597(1) merely gave those who had been authorised by the ASC standing to apply for the appropriate order. As the decision to authorise them had been made under a provision of the Australian Securities Commission Act 1989 (“ASC Act”), it was in that Act that the right to apply to the tribunal had to be found. As decisions made under s. 11(4) are outside the scope of s. 244, which provides for review to the Tribunal, they were not reviewable.
In the course of its reasons, the Full Court explained the difference in language and substance between s. 597(2) and 597(1). Section 597(2) provided for an application to be made for an order in relation to certain persons. In doing so, it confers standing to apply for such an order. The Full Court said that “… s 597(2) … relevantly confers a function or power upon the ASC within the meaning of s 11(1) of the ASC Act …”.[33] In relation to s. 597(1) the Full Court said that it is:
“… not expressed as a dispositive provision creating rights or liabilities or reposing powers or functions. Legal rights and duties in relation to the examination of persons concerned with corporations are created in plain terms in the balance of s 597. Section 597(1) specifies the membership of a class in which, together with the ASC, is reposed the power or function of making certain court applications. Membership of the class includes those “authorised” to a certain effect by the ASC. It is consistent with this explanatory or definitional character of s 597(1) to treat the phrase “authorised by the Commission” as a descriptive of persons who have attained that state or condition by the exercise of a function or power of the ASC which has a legislative source outside the subsection.”[34]
It is implicit in the judgment that, as a definitional provision, it could not confer power on the ASC to make a decision. There was no other provision in the Law under which it could be made. As a decision could not be made under the Law, s. 1317B(1) did not permit an application to be made for review of the ASC’s decision.
[33] (1992) 40 FCR 402; 108 ALR 70 at 407; 75
[34] (1992) 40 FCR 402; 108 ALR 70 at 408; 75
Without reaching a concluded view, the Full Court considered whether s. 11(4) of the Act could be the legislative source of the ASC’s power to make a decision authorising a prescribed person. If it were, it would be on the basis that the authorisation of a prescribed person would be reasonably incidental to the function that had been conferred on the ASC when ss. 11(1) and 597(2) were read together. It did not have to decide that issue for, if s. 11(4) were the source of power, s. 244 of the ASC Act did not give the Tribunal jurisdiction to review decisions made using that power.
The same facts lay behind the judgement of the Full Court of the Federal Court[35] in the Mercantile Mutual Insurance v Australian Securities Commission.[36] Again the decision of which review was sought was a decision made to authorise Messrs Murphy and Allen to apply under s. 597(2) of the Law. Review of that decision was sought under the ADJR Act and s. 39B of the Judiciary Act 1903. In finding that the source of power of the authorisation was s. 11(4) of the ASC Act, a differently constituted Full Court reached the same conclusion as that reached in the Hongkong Bank case. Consideration was given to the validity of the authorisation and that is not relevant in these proceedings.
[35] Black CJ, Lockhart and Gummow JJ
[36] (1993) 40 FCR 409; 112 ALR 463
The Full Court in Mercantile Mutual had to resolve the source of power to make a decision authorising a prescribed person. They clearly held that s. 11(4) of the ASC Act is that source and that s. 597(1) is not. Black CJ said that Hongkong Bank had expressly left open whether s. 597(2) confers functions upon the ASC to which a power may attach. His Honour concluded:
“… It may, in my view, be readily concluded that s 11(4) of the ASC Act, which provides that the ASC has “power to do whatever is necessary for or in connection with, or reasonably incidental to, the performance of its functions” confers the power. If the clearly discernible function of authorising persons to make application to a court under s 597 of the Corporations Law is to be discharged at all then it is “necessary” for the ASC to have power to perform that function. Section 11(4) of the ASC Act applies in such a case according to its terms.”[37]
[37] (1993) 40 FCR 409; 112 ALR 463 at 411-412; 465
Lockhart J noted that the Full Court rejected the argument that s. 597 is the source of power of the ASC to authorise persons to make application to the court under that section. It did not, however, exclude s. 597 as a source of the function of the ASC to authorise persons to make applications. His Honour noted that the ASC Act draws a distinction between functions and powers:
“The distinction is 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 or activities on the other.”[38]
Before the incidental power conferred by s. 11(4) can be exercised, it must be attached to a function of the ASC that is given to that body by or under some statutory provision other than s. 11(4). Lockhart J examined the functions given by s. 597(2) and to the power it expressly gives to a prescribed person or the ASC to apply to the Court in relation to a person. He concluded that there:
“… is to be gleaned from s 597 a plainly discernible function of the commission to authorise persons to make applications under section, a function conferred on the ASC itself. This is distinct from the power vested in the ASC to grant that authority. The source of the power is the incidental power conferred on the ASC by s 11(4). …”[39]
[38] (1993) 40 FCR 409; 112 ALR 463 at 422; 475
[39] (1993) 40 FCR 409; 112 ALR 463 at 422-423; 476
Gummow J reached the same conclusion. In doing so, his Honour commented that a power to authorise a prescribed person could have been conferred on the ASC by implication. He said that:
“… An example is provided by s 33 of The Housing Act 1980 (UK), which was considered by the English Court of Appeal in Wansbeck District Council v Charlton (1981) 79 LGR 523. Section 33(2) stated:
‘A notice under this section must be in a form prescribed by regulations made by the Secretary of State and must specify the ground on which the court will be asked to make an order for possession of the dwelling house.’
It was held that this contained a clear implication that the Secretary of State had power to make regulations thereunder. As will have become apparent, s 33 was cast in a different form to s 597(1). The latter provision is drawn in terms to explain the sense in which the expression ‘a prescribed person’ is used in the balance of s 597. It assumes the grant of authorisation by the ASC of those constituting one species of the genus ‘prescribed person’.”[40]
[40] (1993) 40 FCR 409; 112 ALR 463 at 440; 493
In 1992, the ASC refused to apply to the CALD Board under s. 1292(d) of the Law to make an order suspending or cancelling the registration of Mr Max Donnelly as a liquidator. Mrs Creswick had asked it to make that application. Foster J considered whether the ASC’s refusal could be reviewed by the Tribunal when he decided Creswick v Australian Securities Commission.[41] Deputy President McMahon had decided that it did not on the basis of the reasoning in Hongkong Bank. His Honour agreed that Deputy President McMahon was correct and that s. 11(4) of the ASC Act had to be looked to as conferring the necessary power on the ASC. As the Tribunal only has jurisdiction to review those of the ASC’s decisions specified in s. 244 and as a decision under s. 11(4) is not one of those decisions, the Tribunal did not have jurisdiction.
[41] [1993] FCA 272; NG 3161 of 1992
In 1994, von Doussa J gave judgment in Coopers & Lybrand v Australian Securities Commission.[42] The ASC issued a notice to Coopers & Lybrand. The notice began by referring to the exercise of the ASC’s functions and powers under s. 1292 of the Law. It then advised Coopers & Lybrand that, under s. 30 of the ASC Act, it was required to produce all books, files and working papers relating to Cooper & Lybrand’s audit of the financial statements of the REI Building Society.
[42] (1994) 53 FCR 599; 126 ALR 465
Von Doussa J set out the relevant provisions of s. 1292 and s. 1294 to which it refers:
“1292(1) The [Companies Auditors and Liquidators Disciplinary] Board may, if it is satisfied on an application by the Commission for a person who is registered as an auditor to be dealt with under this section that, before, at or after the commencement of this section:
…
(d)… the person has failed, whether within or outside Australia, to carry out or perform adequately and properly:
(i) the duties of an auditor; or
(ii)any duties or functions required by an Australian law to be carried out or performed by a registered company auditor;
or is otherwise not a fit and proper person to remain registered as an auditor;
by order, cancel, or suspend for a specified period, the registration of the person as an auditor.
…
(12) This section has effect subject to section 1294.
Section 1294 provides:
1294(1) The Board shall not:
(a)cancel [or] suspend the registration of a person as an auditor, as a liquidator or as a liquidator of a specified body corporate; or
(b) deal with a person in any of the ways mentioned in subsection 1292(9);
unless the Board has given the person an opportunity to appear at a hearing held by the Board and to make submissions to, and adduce evidence before, the Board in relation to the matter.
(2) Where subsection (1) requires the Board to give a person an opportunity to appear at a hearing and to make submissions to, and bring evidence before, the Board in relation to a matter, the Board shall give the Commission an opportunity to appear at the hearing and to make submissions to, and bring evidence before, the Board in relation to the matter.”[43]
[43] (1994) 53 FCR 599; 126 ALR 465 at 603-604; 469-470
He also set out s. 30 of the ASC Act:
“The Commission may give to:
(a)a body corporate that is not an exempt public authority; or
(b)an eligible person in relation to such a body corporate;
a written notice requiring the production to a specified member or staff member, at a specified place and time, of specified books relating to affairs of the body.”[44]
[44] (1994) 53 FCR 599; 126 ALR 465 at 604; 470
Von Doussa J referred also to s. 28 of the ASC Act as it limits the powers conferred by Division 3 of Part 3 of the ASC Act, of which s. 30 was a part. Section 28 provides:
“A power conferred by this Division (other than sections 29, 35 and 36) may only be exercised:
(a)for the purposes of the performance or exercise of any of the Commission’s functions and powers under a national scheme law of this jurisdiction; or
(b)for the purposes of ensuring compliance with a national scheme law of this jurisdiction; or
(c)in relation to:
(i)an alleged or suspected contravention of a national scheme law or this jurisdiction; or
(ii)an alleged or suspected contravention of a law of this jurisdiction, being a contravention that concerns the management or affairs of a body corporate, or involves fraud or dishonesty and relates to a body corporate, securities or futures contracts; or
(d)for the purposes of an investigation under Division 1.”[45]
[45] (1994) 53 FCR 599; 126 ALR 465 at 604; 470
Considering these provisions, von Doussa J concluded that the power of the CALD Board may only be enlivened by an application from the ASC. He continued:
“ It is implicit in s 1292(1), particularly when it is read to have effect subject to s 1294 as required by s 1292(12), that the ASC as part of that function must monitor the conduct of registered auditors, and in the course of determining whether to exercise the function of making application to the Board, to gather information relevant to the circumstances on which the Board could appropriately order cancellation or suspension. To enable these administrative functions to be performed in my opinion it is implicit in s 1292(1) that the ASC is empowered to do so. The ASC is further empowered by s 1294(2) to appear at a hearing to make submissions and to bring evidence before the Board. The exercise of this express function and power to be meaningful must extend also to conducting inquiries to ascertain the full circumstances of the conduct of the subject of the hearing before the Board.”[46]
Von Doussa J drew support for his conclusion from Hongkong Bank and Mercantile Mutual. If he were wrong in his conclusion that s. 1292(1) is not the only source of a function to investigate but also the power to perform that function, he continued, s. 11(4) is a clear grant of power to perform the function.[47] The investigative powers that the ASC wanted to use were necessary for or in connection with or reasonably incidental to the performance of functions of the ASC arising under s. 1292(1) of the Law.
[46] (1994) 53 FCR 599; 126 ALR 465 at 605; 471
[47] (1994) 53 FCR 599; 126 ALR 465 at 606; 472
It is apparent from his judgment that von Doussa J reached his conclusion by applying principles consistent with those implicit in the Full Courts’ judgments in Hongkong Bank and Mercantile Mutual. That is so regardless of whether or not, as Ms Hubble submits, another might have respectfully thought that
the application of the principles could have led to a different conclusion. It seems to me that the principles that both the Full Courts Foster J and von Doussa J applied are:
functions are the purposes or activities of a body and powers are the means by which that body may perform or execute those functions;
an enactment may include an extended definition of “function” e.g. “functions include powers and duties”;
the Law confers, and the ASC (now ASIC) Act has, both functions and powers;
whether a statutory provision confers a function or a power or both depends on its wording and context;
a statutory provision may confer an implied power; and
whether ASIC has the power of the sort expressed in s. 11(4) of the ASC (now ASIC) Act, there must first be found a function. The power granted is only that necessary for, or in connection with, or reasonably incidental to the performance of that function.
These principles are consistent with the principles that guided the courts in deciding the other cases unrelated to the corporations jurisdiction to which I have referred. All require identification of a power in an enactment and then a link of substance between what is done and the power given under the enactment. A finding in one context that a decision is made under an enactment and not in another is not, it seems to me, indicative of different principles but of different circumstances to which they are applied.
Most recently, similar issues have been considered by Downes J as President of the Tribunal. He did so in Re Rich and Australian Securities and Investments Commission[48] and it is apparent from his reasons that he too drew on the principles I have set out above. Mr Rich had made a complaint under s. 536 of the Act relating to the liquidation of One.Tel Limited. When ASIC declined to investigate his complaint, Mr Rich asked it for reasons under s. 28 of the AAT Act. He was only entitled to those reasons if ASIC’s decision was reviewable by the Tribunal. I have already set out the terms of s. 536 above.[49] Downes J reviewed the authorities of the Federal Court, to which I have referred and concluded:
“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.”[50] (emphasis added)
[48] [2003] AATA 1044
[49] at [20]
[50] [2003] AATA 1044 at [22]
In describing the power conferred by s. 536 in this passage, Downes J spoke of it as conferring “power on it to carry out that function.” These are the words I have emphasised in the passage above. He did not address the question whether declining to exercise the power to carry out that function, as opposed to carrying it out, was also conferred by s. 536.
Is ASIC’s decision not to inquire into a matter made under s. 536 of the Act or under s. 11(4) of the ASIC Act?
Section 536 prescribes an activity, and so a function, that ASIC, not to mention the Court, may undertake or perform. That activity is to inquire into a matter. It is an activity that ASIC may only undertake if one of the events in ss. 536(1)(a) or (b) has occurred. The former requires it to be satisfied of certain matters regarding the liquidator. The latter requires that there has been a complaint with respect to the conduct of a liquidator in connection with the performance of his or her duties. If one of those events has occurred, it “may inquire into the matter”. That formulation means that it may choose to inquire into the matter. This follows from the provisions of s. 33(2A) of the Acts Interpretation Act 1901[51] and the meaning of “discretion” as “… the freedom or right to make decisions and do as one thinks best …”.[52] If ASIC chooses to inquire into a matter, it chooses to act under s. 536(1). Its decision is supported by that section and can be said to have been made under it.
[51] The Act was enacted after the commencement of s. 33(2A).
[52] Chambers 21st Century Dictionary, revised edition 1999
What of a decision not to enquire into a matter even if one of the events in ss. 536(1)(a) or (b) has occurred? There is nothing in s. 536 that states that ASIC must decide whether or not to inquire into the matter but, as a matter of practicality, it must make a decision of some sort when it is faced with a complaint within the meaning of s. 536(1)(b). It may, for example, decide to defer consideration of the question altogether if it needed further information. That is not a decision contemplated by s. 536(1). It is rather an example of ASIC’s incidental power under s. 11(4) of the ASIC Act to do whatever is necessary in connection with the performance of its functions. That ASIC may decide not to inquire into a matter is contemplated by s. 536(1). It is implicit in the section’s giving it a discretion. Once ASIC has decided whether to inquire or not, there is a link of substance between the decision and the power conferred by the section. The decision, whether to act or not to act, has been made under that section.
That this is the conclusion contemplated by Parliament is illustrated by reference to two other sets of provisions of the Act. I will begin with s. 1292(2) and the power it gives the CALD Board to deal with a person who has met one or more of the criteria specified in ss. 1292(2)(a) or (d). The manner in which it is formulated is similar to that in s. 536. Section 1292(2) provides that “The Board may … by order, cancel, or suspend for a specified period, the registration of a person as a liquidator” if one or more of those criteria are satisfied. As it is given a discretion, the CALD Board may choose whether or not to cancel or suspend a liquidator. That its decision to choose not to do either is just as much a decision under s. 1292(2) as is a decision to choose to do so is apparent from the review provisions in s. 1317B. In providing that ASIC is taken to be a person affected by a decision made under the Act by the CALD Board, s. 1317B(2) makes it clear that Parliament contemplated that a decision to take no action at all would be reviewable under s. 1317B. After all, ASIC is the regulator with responsibility for the administration of the corporations legislation. If it could not seek review of all of the CALD Board’s decisions, including those in which it refused to take any action to cancel or suspend a liquidator’s registration, its hands would be tied in a manner inconsistent with its functions.
In relation to s. 536 there is no provision similar to s. 1317B(2) but there is no need to. ASIC, and not a separate entity such as the CALD Board, is the decision-maker. Apart from that, the structure of the provisions and, in my view, the intent remains the same. A decision not to act when exercising the discretion is as much a decision under the section as a decision to act.
The other set of provisions to which I refer are those in ss. 1317B and 1317C. Section 1317C provides that s. 1317B does not apply in relation to fifteen decisions it specifies. Three of its provisions are relevant in this context. The first two refer to decisions under ss. 601CC, 601CL and Chapter 5A and provide:
“Section 1317B does not apply in relation to:
…
(d)a decision made by ASIC in the performance of a function, or in the exercise of a power, under section 601CC or 601CL or Chapter 5A; or
(e)a decision by ASIC to refuse to exercise a power under section 601CC or 601CL or Chapter 5A; or
…”[53]
Section 601CC is concerned with situations in which a registered Australian body has ceased to carry on business. ASIC is given various powers but all are expressed in a similar way. Section 601CC(4), for example, provides that:
“At the end of the period specified in a notice sent under subsection (3), ASIC may, unless cause to the contrary has been shown, strike the body’s name off the register and must publish in the Gazette notice of the striking off.”
Section 601CL is concerned with a registered foreign company ceasing to carry on business in Australia. Section 601CL(5) gives ASIC a similar power to that it has under s. 601CC(4). Chapter 5A is concerned with de-registrations of companies as well as with the transfer of registrations. Except where it is required to take certain steps,[54] ASIC is given power to deregister a company if the company is being wound up and it has reason to believe that certain other criteria have been fulfilled.[55]
[53] Act, ss. 1317C(d) and (e)
[54] e.g. Act, s. 601AC requiring ASIC to deregister a company if the Court makes certain orders.
[55] e.g. Act, s. 601AB(2)
If Parliament had intended that ASIC could only make a decision under either ss. 601CC(4) or 601CL(5) to strike off the body’s name or to de-register a company under Part 5A, there would have been no need for it to have enacted ss. 1317C(d) and (e). In enacting them, it has reinforced the notion that ss. 601CC(4) and 601CL(5) and the provisions of Chapter 5A expressed in similar terms are to be given their ordinary meanings. Their ordinary meanings are that, in giving ASIC a discretion, they are giving it a choice to decide whether to act, or not act, upon its power. In giving it that choice, its decision is made under those sections.
The third provision that is referred to in s. 1317C and that is relevant is that in s. 1317C(c). It provides that s. 1317B does not apply in relation to:
“a decision by ASIC not to consent to the referral of a financial report to the Financial Reporting Panel under Subdivision C of Division 9 of Part 2M.3”.
Subdivision C of Division 9 of Part 2M.3 is concerned with situations in which the lodging entity wishes to refer a financial report to the Financial Reporting Panel. It must apply to ASIC for its consent to the referral. Section 323EH(3) sets out ASIC’s obligations if it “… consents to the referral …”. If it were not implicit in the section that any decision ASIC made to refuse its consent is a decision made under the section, there would have been no need to include s. 1317C(c).
The pattern of the exclusions specified in s. 1317C from the review provisions of s. 1317B supports the conclusion that I have reached that a decision not to inquire into a matter under s. 536 is a decision made under that section. As such a decision is not excluded by s. 1317C, it is reviewable by the Tribunal.
Did ASIC make a decision not to inquire into a matter under s. 536?
I am not satisfied that ASIC made a decision under s. 536 not to investigate the matters Mr Nickson raised. Certainly, it could have made such a decision for its discretion was enlivened when Mr Nickson made his complaint about the conduct of Mr McLellan, a liquidator, in connection with the performance of his duties as administrator of the EPAC Group i.e. the event specified in s. 536(1)(b) has occurred. ASIC decided that, on the information available to it, Mr McLellan’s conduct did not require regulatory intervention at that time. It referred specifically to the CALD Board. That was consistent with its reference to regulatory intervention. It made no reference to any inquiry of the sort that it could conduct under s. 536. In omitting to mention such an inquiry, I have concluded that ASIC has not decided not to enquire under s. 536 into the matters raised by Mr Nickson. Instead, it has decided not to turn its mind to its powers under s. 536 at all. That is a decision that it could make exercising its powers under s. 11(4) of the ASIC Act but that is not a decision that is reviewable by the Tribunal because of the operation of s. 244(2) of that legislation. As it has not made a decision at all under s. 536 of the Act, the Tribunal cannot rely on s. 1317B(1) of the Act on which to base its jurisdiction to review ASIC’s action.
Is ASIC’s not applying to the CALD Board a decision made under s. 1292(1) of the Act or under s. 11(4) of the ASIC Act?
In answering the question posed in the heading, I am bound by the judgment of Foster J in Creswick v Australian Securities Commission. His judgment is directly in point whereas that of von Doussa J, which also considered s. 1292, is not. For the sake of testing the principles I have drawn from all of the cases including that case, though, I will consider the matter for the moment as if I am not bound by it.
Mr Nickson did not ask that ASIC make an application to the Board but I have considered it under that section as ASIC did. Section 1292(2) confers a discretion, and so a power, on the Board to cancel or suspend a person’s registration as liquidator. Among the pre-requisites that must be satisfied before the Board may exercise its discretion is that ASIC has made an application to it. Section 1292 does not provide that ASIC may make that application. Instead, it refers in s. 1292(1) to ASIC’s having made an application. Its language is not consistent with that of the Act’s granting a power. All that is implicit in the section is that deciding whether to make an application is one of ASIC’s activities i.e. it is one of its functions. Therefore, the power must be found outside s. 1292(2). When that is done, the only source is found in s. 11(4) of the ASIC Act. Making a decision whether to make an application to the Board is something that is “… necessary for or in connection with, or reasonably incidental to, the performance of its functions …” within the meaning of s. 11(4) of the ASIC Act. As s. 11(4) is not encompassed by s. 244(2), the Tribunal does not have jurisdiction to review a decision under it. This is the conclusion reached by Foster J in Creswick v Australian Securities Commission.
Is ASIC’s not making an investigation a decision made under s. 13 or s. 11(4) of the ASIC Act?
Section 13 of the ASIC Act gives ASIC a discretion to investigate when it provides, in part, that it “… may make such investigation as it thinks expedient …”.[56] Again, the circumstances in which it may exercise its discretion are not boundless. Instead, it is hedged with pre-requisites including its having reason to suspect that certain events have occurred. Once it has decided that is the case, its power to investigate is limited to that which is expedient for the due administration of the corporations legislation. For the reasons I gave in relation to s. 536, I consider that the discretion given to ASIC by s. 13 includes both the power to investigate and the power to decline to investigate. Therefore, if ASIC made a decision under this section declining to investigate Mr Nickson’s complaints, it is not a decision that is reviewable by the Tribunal as it is not included in the sections specified in s. 244(2) of the ASIC Act.
[56] ASIC Act, s. 13(1)
Decision
For the reasons I have given, I have decided that the Tribunal does not have jurisdiction to review the decisions made by the respondent on 10 February 2005.
I certify that the fifty-nine preceding paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: ...............................................................
Nathaniel Wills Associate
Date of Hearing 22 July 2005
Date of Decision 25 August 2005
For the Applicant self represented
Counsel for the Respondent Ms G. HubbleSolicitor for the Respondent Ms J. Birch
Administrative Law CoordinatorAustralian Securities & Investments Commission
“(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 requirement;
(f) retaining, or refusing to deliver up, an article, or
(g) doing or refusing to do any other act or thing.”
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