Power and Australian Securities and Investments Commission
[2015] AATA 652
•31 August 2015
Power and Australian Securities and Investments Commission [2015] AATA 652 (31 August 2015)
Division
TAXATION AND COMMERCIAL DIVISION
File Numbers
2014/4523 and 2015/3248
Re
Mark Power
APPLICANT
And
Australian Securities and Investments Commission
RESPONDENT
DECISION
Tribunal Deputy President K Bean
Date 31 August 2015 Place Adelaide 1.In application 2014/4523, the applicant’s application for an extension of time in which to seek review of the respondent’s decision of 14 November 2011 is granted pursuant to subsection 29(7) of the Administrative Appeals Tribunal Act 1975 (the AAT Act). Time is extended until 2 September 2014, being the date when he lodged his Application for Review.
2.In application 2015/3248, the applicant’s application for an extension of time in which to seek review of the respondent’s decision of 14 November 2011 is also granted pursuant to subsection 29(7) of the AAT Act. Time is extended until 14 September 2015, giving him 14 days in which to lodge an Application for Review in that matter.
........................................................................
Deputy President K Bean
CATCHWORDS
PRACTICE AND PROCEDURE – Applications for extension of time – Decisions made by ASIC in 2011 to cancel Australian Financial Services licences – Applications for review withdrawn in 2011 – Applications for extension of time prompted by rejection of new application for licence in 2014 – Standing – Where company deregistered – Whether applicant a person whose interests are affected – Consideration of Hunter Valley principles – Extensions of time granted.
LEGISLATION
Administrative Appeals Tribunal Act 1975, s 29(7)
Corporations Act 2001, ss 912A, 915C(1)
CASES
Re McHattan and Collector of Customs (NSW) (1977) 1 ALD 67
Re VBN and Australian Prudential Regulation Authority (2005) 92 ALD 437
Re Son and Australian Trade Commission (2005) 86 ALD 469
Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344
Budd v Secretary, Department of Education, Employment and Workplace Relations [2008] FCA 1540
Phillips v Australian Girls' Choir Pty Ltd & Anor [2001] FMCA 109
Lukac v Linfox Armaguard Pty Ltd [2010] FCA 740Transurban City Link Ltd v Allan (1999) 57 ALD 583
SECONDARY MATERIALS
Pearce D C, Administrative Appeals Tribunal (3rd ed, LexisNexis Butterworths, 2013)
REASONS FOR DECISION
Deputy President K Bean
31 August 2015
Between 2004 and November 2011, the applicant in these matters, Mr Power, ran a financial services business. The business was run under two separate Australian financial services licences, one held by Mr Power personally and one held by his company, Mark Power Financial Pty Ltd (MPF). However, after a lengthy investigation, on 14 November 2011, a delegate of the respondent made decisions to cancel both licences.
Although he initially sought review of those decisions, by means of applications lodged in the Brisbane Registry of the Tribunal, on 8 December 2011 Mr Power and his company withdrew their applications to the Tribunal for review of the cancellation decisions.
Various events then ensued and a significant amount of time elapsed before Mr Power ultimately lodged a further application for a financial services licence, in the name of Global Financial Markets Pty Ltd, in August 2013. However, that application was rejected, and in the decision dated 10 July 2014 rejecting the application, the delegate made extensive reference to and to some extent relied upon the cancellation of the licences held by Mr Power and MPF in 2011.[1]
[1] For example, the delegate was not satisfied that Mr Power had acquired the requisite knowledge and skills since the 2011 cancellation decisions were made, notwithstanding 300 hours of private study, because he did not have any recent experience. The delegate took into account the circumstances surrounding the cancellation of his previous licences, and considered that it was “highly relevant” that non-compliances were found with respect to “fundamental compliance duties” and that those non-compliances were “not deliberate”. The delegate stated that those findings demonstrated that Mr Power did not understand the relevant obligations and could not be relied upon to discharge those duties.
On 16 July 2014, Mr Power, or more accurately, Global Financial Markets Pty Ltd (GFM), applied to the Tribunal for review of the decision to reject its application for a licence. In addition, following reflection on his position and communications with staff of the Tribunal, Mr Power decided to apply for an extension of time to seek review of the 2011 decisions to cancel the relevant licences. Mr Power lodged two applications for extensions of time, one in his own name and one in the name of MPF. However, after those applications had proceeded to a hearing, it came to the Tribunal’s attention that MPF had in fact been deregistered and ceased to exist on 23 November 2014. The Tribunal accordingly dismissed the application brought by MPF (2014/4522), leaving the application brought by Mr Power personally (2014/4523) on foot.
Subsequent to that, Mr Power lodged a further application in his own name on 30 June 2015 requesting an extension of time in which to seek review of the decision cancelling the licence held by MPF, made by the respondent in November 2011. This became application 2015/3248.
As some additional issues arose in the context of that application, a further hearing in both extant applications was held on 30 July 2015. The main issue addressed at that hearing was the question of whether Mr Power had standing in application 2015/3248. I indicated at the hearing on 30 July 2015 that I would determine all of the outstanding issues together, namely whether an extension of time should be granted in application 2014/4523, whether Mr Power had standing in application 2014/3248, and if so, whether an extension of time should be granted with respect to that application. It is those issues which are the subject of this decision.
I will first address the question of standing in application 2015/3248, before proceeding to address the remaining issues.
DOES MR POWER HAVE STANDING IN APPLICATION 2015/3248?
The respondent contends that Mr Power is not a person whose interests are affected by the decision to cancel the licence of MPF in November 2011, for a number of reasons.[2]
[2] Section 27 of the Administrative Appeals Tribunal Act 1975 provides that an application for review of a decision may be made by a person “whose interests are affected by the decision”.
Firstly, the respondent contends that the question of whether Mr Power’s interests are affected in the relevant sense should be determined by reference to the scope and purpose of the relevant provisions of the Corporations Act 2001, including s 915C. The respondent points out that the objective of the relevant Part of the Corporations Act 2001 is one of public protection. The respondent also points out that MPF has been deregistered and will not carry on a financial services business in future. The respondent further contends that the reputation of a licensee’s directors, officers and employees is not among the matters identified as relevant by s 912A of the Corporations Act 2001, either implicitly or explicitly. Accordingly, the respondent contends that Mr Power has no relevant “interest” in the decision of which he seeks review.
In addition, the respondent contends that:
… affect (sic) on reputation alone is not an interest recognised by law as sufficient of itself to provide standing for the purpose of conducting a review.[3]
In support of that proposition, the respondent relies upon the decision of Justice Brennan in Re McHattan and Collector of Customs (NSW)[4], and contends that:
… there are no decided cases in which an alleged adverse reputational affect (sic) has been accepted by an Australian court or tribunal as sufficient to establish standing. It would be new law and, for the reasons stated, contrary to principle, to allow standing on that basis in the present circumstances.[5]
[3] Respondent’s Outline of Submissions, dated 27 July 2015, at [27].
[4] (1977) 1 ALD 67.
[5] Respondent’s Outline of Submissions, dated 27 July 2015, at [29].
The respondent also contends that any effect of the decision on Mr Power is, at best, “remote, indirect and fanciful”, and is not currently subsisting.
The respondent further contends that any potential effect on Mr Power’s interests would be as a result of the outcome of the review and not the cancellation decision itself. In its written outline of submissions, the respondent contended that, in determining the question of standing, it was not permissible for the Tribunal to have regard to any benefit accruing to Mr Power as a result of the outcome of the review. In his oral submissions, Counsel for the respondent, Mr Douglas, clarified the respondent’s position, indicating that the respondent did not contend that reputation could never be relevant in determining standing, merely that there were no authorities in which reputation alone had been found to be sufficient to ground standing.
After careful consideration, however, I have concluded that I do not accept all of the contentions of the respondent as to the effect of the relevant authorities.
As I have noted above, the respondent relied in particular on the decision of Justice Brennan (as he then was), sitting as President of the Administrative Appeals Tribunal, in Re McHattan and Collector of Customs (NSW).[6] In that matter, Mr McHattan, a customs agent, sought review of a decision by the Collector of Customs demanding the payment of duty in respect of goods originally entered for home consumption (and therefore not liable to duty) by Termolst Australia Pty Ltd. Mr McHattan claimed that he was a person affected because he had advised Termolst Australia Pty Ltd as to how they should declare the relevant goods for customs purposes. He apparently asserted that if his advice was wrong, he would be liable in negligence and his commercial reputation would be affected.
[6] (1977) 1 ALD 67.
Justice Brennan found that Mr McHattan’s interests were not affected by the reviewable decision. However, in reaching that decision he observed “In the absence of full argument, I should wish to restrict the ambit of this decision so far as it may be to the precise circumstances of the present case”.[7] In addition, he concluded that there was no evidence in the particular case that the making of the demand affected Mr McHattan’s reputation, observing as follows:
Without seeking to lay down a hard and fast rule as to what interests may be relatively affected by a demand for payment of customs duty, the reputation of a customs agent for the giving of right advice is not shown to be affected by the making of a particular demand for payment, merely because the payment would be due only upon the footing that the advice is erroneous. The advice may be right and the demand may be erroneous. And if the reputation depends upon the repetitive validity or acceptance of opinions expressed, the making of a particular demand does not, except in a most tenuous way, affect reputation. There is no evidence in this case that the making of the demand affected Mr McHattan’s reputation.[8]
[7] (1977) 1 ALD 67, at 68.
[8] (1977) 1 ALD 67, at 70.
On my reading of this decision, it is implicit in the above paragraph that his Honour regarded any effect on Mr McHattan’s reputation as potentially supporting his claim to standing. However, as there was no evidence of a reputational effect, and no other basis for standing, his Honour concluded that Mr McHattan’s interests were not relevantly affected. On my reading, this decision does not stand as authority for the proposition that reputational interests cannot found or support the existence of standing.
The respondent also relied upon this decision as support for the proposition that “The interest of which s 27(1) speaks is an interest which is affected by the decision to be reviewed, not by the review”.[9] I accept that the decision does stand for that proposition, with his Honour having observed in his Reasons:
The outcome or possible outcome of the proceedings is not the criterion for determining whether the proceedings have been duly instituted, and the relevant interest must be one which is affected by the demand whatever the outcome of a review might be.[10]
[9] (1977) 1 ALD 67, at 69.
[10] (1977) 1 ALD 67, at 69.
However, in a later decision, the Full Court of the Federal Court did not endorse that aspect of the decision in McHattan. In Transurban City Link Ltd v Allen[11], the Court observed:
[11] (1999) 57 ALD 583.
It is inherent in the submissions on behalf of Mr Allan that, contrary to the view of Aickin J, the question of special interest is to be determined without reference to the relationship between the interest of the applicant on the one hand and the relief which review of the decision complained of would, if successful, afford on the other. It would, to say the least, be somewhat strange if this were the case. If the relief sought could never further the interest of an applicant or the failure to grant it harm him or her, common sense would suggest that the applicant for judicial review would lack standing.
If there be support at all for such a submission it may, perhaps, be found in the emphasis placed in a number of the cases upon the relationship between the applicant and the “subject matter of the proceedings”, rather than the outcome of the proceedings: see, for example, per Stephen J at CLR 42 in Onus. However there is nothing in these cases which suggests that outcome is irrelevant. The only place where at first sight the submission appears to find support is in a passage in the judgment of Brennan J in Re McHattan and Customers (NSW) (1977) 1 ALD 67 at 69; 18 ALR 154 at 157, cited by the learned primary judge in the judgment now appealed from, where his Honour, then president of the tribunal, said:
The interest of which s 27(1) speaks is an interest which is affected by the decisions to be reviewed, not by the review. The outcome or possible outcome of the proceedings is not the criterion for determining whether the proceedings have been duly instituted, and the relevant interest must be one which is affected by the [decision] whatever the outcome of a review might be.
But what his Honour there said has to be understood by reference to the context in which the case arose. The applicant to the tribunal was a customs agent. The decision of which review was sought was the classification of certain goods for customs purposes. The applicant had advised an importer about the rate of duty payable. As a result of the decision he was potentially liable to the importer for negligent advice. Apart from an alleged injury to his reputation for having given wrong advice, he clearly had no interest at all in the subject matter of the decision. His Honour held that the applicant was not a person who had standing to apply to the tribunal just because the outcome of the review would either leave him liable to be sued or alternatively free him from the possibility of suit. The case does not stand for the contrary proposition that a person totally unaffected by the outcome of the review can have standing. It stands only for the proposition that the mere outcome of the review may not suffice to give standing.
The case is also significant for the passage at ALD 70; ALR 157 where his Honour referred to the “ripples of affection” which may widely extend in respect of a particular decision. As his Honour then observed, and it is the problem which this appeal is concerned:
The problem which is inherent in the language of the statue is the determination of the point beyond which the affection of interests by a decision should be regarded as too remote for the purposes of s 27(1).
In summary, the question of standing to review an administrative decision is to be determined by reference to the interest which the applicant has in the decision which is under review. It is to be determined by reference to the nature and subject matter of the review and the relationship which the applicant individually or a representative body may have to it. An interest in the outcome of the review may give standing. But there will be no standing where the actual outcome of the review will not affect the applicant. There will be a question of degree involved in many cases.[12]
[12] (1999) 57 ALD 583, at 593 – 594 [46] – [50].
I note also that although the High Court upheld the decision of the Full Court in Transurban, it did not comment on this aspect of the decision.
As to the respondent’s contention that there has never been a case in which standing was held to be established based on reputational interests alone, that may be correct. However, there are certainly decisions of the Tribunal where impact on reputation has been found to be a significant reason for standing being established. For example, in ReVBN and Australian Prudential Regulation Authority[13], a corporate trustee sought to establish that its interests were affected by a decision by APRA to disqualify VBN, who was one of its directors, under subss 120A(2) and (3) of the Superannuation Industry (Supervision) Act 1993 (Cth), in the context of an application to be joined as a party to the relevant proceedings. As subs 120A(2) referred to contraventions by the trustee, the Tribunal’s decision depended to some extent on findings about the trustee’s conduct.
[13] (2005) 92 ALD 437.
In determining whether the trustee was a person whose interests were affected, the Tribunal observed as follows:
Depending on the findings made by the tribunal, that might place the trustee in a more difficult position that it is at the moment. It might have to report to its members in a fashion beyond what it has already done. Its reputation and the confidence of the members of the SFund and of the public generally that the trustee will perform its duties in a proper manner could be open to question.
The trustee’s concerns about the effect that the tribunal’s findings may have upon it are matters of some substance. It may well be that the trustee is never sued but it remains a real possibility just as adverse reflection on, and so damage to, its reputation is a real possibility. Those matters may or may not lead to adverse financial consequences for the trustee but it is not necessary that they do so in the circumstances in which the trustee finds itself. It is conducting a commercial operation in a regulated legal environment in which its reputation is important in maintaining and attracting members. It has an interest in maintaining its reputation. That is an interest which is affected by APRA’s decision in relation to VBN because it is a decision that either depends on findings about the trustee’s conduct or is a decision made against a background of the trustee’s conduct. It is not an interest which is dissipated by the fact that only one of the directors at the relevant time remains a director and that director stood aside from active participation on the Board in October 2004. It is an interest that leads me to conclude that the trustee is “a person whose interests are affected by the decision” of APRA within the meaning of s 30(1A) of the AAT Act.[14]
[14] (2005) 92 ALD 437, at 448 – 449 [21] – [22].
In addition, I note that there is some precedent in the Tribunal for concluding that a sole director and shareholder of a company was a person affected by a reviewable decision in relation to the company. In Re Son and Australian Trade Commission[15], an application by Mr Son’s company, Sean’s Distribution Pty Ltd, for an export market development grant had been rejected by the respondent. However, the application for review of that decision by the Tribunal was made by Mr Son and not by Sean’s Distribution Pty Ltd. In determining that Mr Son did have standing to make the relevant application, Senior Member Fice commented as follows:
I am satisfied that Mr Son, as the sole director and shareholder of Sean’s Distribution Pty Ltd, is a person who is affected by the reviewable decision. Although he is not directly affected, there is no restriction in either the Act or the AAT Act compelling a direct effect. If there were such a limit in the Act, one could reasonably have expected a right to seek review under s 98 to be made available only to the applicant for a grant. That is not the case. Furthermore, I am satisfied that Mr Son is a person whose interests are affected by the reviewable decision, because, according to his evidence, he provided the money which was spent in attempting to distribute film rights in South Korea. I have no doubt that if the company were successful in recovering some of its expenses Mr Son would be reimbursed.[16]
[15] (2005) 86 ALD 469.
[16] (2005) 86 ALD 469, at 476 [27].
At the hearing on 30 July 2015, Mr Douglas contended that this paragraph of the decision in Son was incorrectly decided and inconsistent with the authorities cited in the respondent’s Outline of Submissions. However, whilst I accept that the situation in Son was unusual, I am not persuaded that the Tribunal’s decision is inconsistent with other relevant authorities.
As I understand the position therefore, the effect of the authorities is that:
·the fact that the outcome of a review has the potential to affect the applicant is relevant to the question of standing;
·although it may not be sufficient of itself, a reputational effect has relevance to determining standing;
·the fact that the applicant is not the entity or person most directly affected by the decision under review is not an absolute barrier to establishing standing.
It is in this context that I must address the question of whether Mr Power has standing to seek review of the decision cancelling the licence of MPF.
ANALYSIS
I should acknowledge at the outset that it would seem an unusual outcome for the sole director and shareholder of a deregistered company to be found to have standing to challenge a decision cancelling a licence held by that company in circumstances where the company no longer exists and there is no prospect of the company coming back into existence. However, this is an unusual case.
The interests asserted by Mr Power in the decision the subject of his application are several. First and foremost, he seeks to challenge both of the 2011 cancellation decisions, (the MPF decision being the more substantive decision[17]), because those decisions, and the reasons for them, were relied upon to deny the application made by GFM for a financial services licence.
[17] The reasons for the MPF decision are lengthy, and set out in detail the relevant facts and events involving MPF (and Mr Power, as the responsible person) which were of concern to ASIC. The reasons for the decision to cancel Mr Power’s personal licence make frequent reference to the delegate’s findings in the MPF decision.
The respondent contends that Mr Power can contest the correctness of those decisions in the context of application 2014/3659 (the GFM application) and does not need to seek review of those decisions for the relevant issues to be addressed insofar as they bear upon the application by GFM for review of the decision not to grant it a licence. However, Mr Power says that, in circumstances where those issues will be ventilated in the context of the GFM application, it is convenient, appropriate and preferable to have all three decisions before the Tribunal.
In addition, Mr Power says that his interests were directly affected by the decision to cancel the licence held by MPF, as he was the sole director and shareholder of MPF and his financial interests were directly affected by its failure to retain a licence and inability to continue operating. Although Mr Power did not refer to this fact, I note that MPF also carried his name. Mr Power also says that his reputation in the financial services industry was adversely affected by both of the cancellation decisions, and he has not been able to obtain employment in the financial services sector since the decisions were made, despite his efforts to do so. As such, he claims both a pure reputational effect and a financial effect secondary to the reputational impact.
I do not consider it necessary for me to expressly address all of the relevant factual issues in this context. Many of them will be addressed in more detail below. In summary, however, I have concluded that I accept that the 2011 cancellation decisions have had the effects on Mr Power contended for by him, namely immediate and indirect financial effects and reputational effects. In addition, I accept that the 2011 decisions were a significant reason for the decision to refuse the licence application of GFM, which, in turn, has had a further tangible impact on Mr Power, through preventing him from re-establishing a financial services business.
I also consider that, were both applications to be successful, the outcome of both reviews would have a significant impact on Mr Power. In particular, this outcome would be likely to go some way toward repairing his reputation and it is likely that this would pave the way for him to re-enter the financial services sector, either as an employee or in the context of his own business, which in turn would have financial benefits for him. I am also prepared to accept for the purposes of this application that there are likely to be some advantages for him in the context of the GFM application, in the Tribunal also reviewing directly both of the 2011 cancellation decisions.
Ultimately, however, the question for me is whether these interests and effects are sufficient to give Mr Power standing in application 2015/3248.
I have not found this an easy question to determine. I accept much of what the respondent puts as to the relative remoteness of Mr Power’s interests from the decision under review and the relevance of the fact that the company to which the reviewable decision related, MPF, no longer exists such that, even if the application was successful, it could not regain its licence. Having said that however, as I have already indicated, I am satisfied that a favourable outcome of review of the MPF cancellation decision would significantly benefit Mr Power. Such an outcome, were it to occur, would go some way toward repairing his reputation and I consider it would also improve his employment prospects and earning capacity. Further, I am satisfied that he would derive more benefit from having both cancellation decisions set aside than from having one of the cancellation decisions set aside. Equally, insofar as those decisions are relevant to the GFM matter, I consider there would be more benefit to Mr Power in having both of the cancellation decisions reviewed by this Tribunal in the context of the GFM application, rather than only one of them.
Noting that the threshold to establish standing is relatively low in the context of s 27 of the Administrative Appeals Tribunal Act 1975 (the AAT Act), and that the categories of potential “interest” are not closed, I have ultimately concluded that Mr Power’s interests are sufficiently affected such that he does have standing to challenge the relevant cancellation decision. In reaching that conclusion, I have had particular regard to the economic and reputational effect of that decision on Mr Power, and the potential benefits which would flow to him if that decision were to be set aside. I have concluded that those impacts and potential benefits are sufficient to give Mr Power standing to challenge the reviewable decision the subject of application 2015/3248.
Accordingly, the next issue before me is whether Mr Power should be granted extensions of time, pursuant to subs 29(7) of the AAT Act, in one or both of applications 2014/4523 and 2015/3248.
SHOULD EXTENSIONS OF TIME BE GRANTED?
The Legal Framework
Under subs 29(7) of the AAT Act, the Tribunal has the power to extend the time for filing an application for review if “it is reasonable in all the circumstances to do so”.
Generally, to extend time the Tribunal must consider that there is an acceptable explanation for the delay and it is fair and equitable in the circumstances to extend time: per Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344. The applicable principles were summarised by Cowdroy J in Budd v Secretary, Department of Education, Employment and Workplace Relations [2008] FCA 1540, by reference to an earlier decision of Federal Magistrate McInnis, as follows:
18. … In Phillips v Australian Girls’ Choir Pty Ltd & Anor [2001] FMCA 109 Federal Magistrate McInnis considered the nature of the discretion contained in s 44(2A)(a) of the AAT Act, and said at [10]:
In the light of A’Hearn’s case, it is clear that at least one of the principles referred to by Wilcox J in the Hunter Valley decision needs to be modified namely that it should not be any longer regarded as law that the inexcusable delay on the part of a solicitor should be visited upon the client and nor should it be a principle that there is in fact a pre-condition to the exercise of discretion in favour of the applicant for extension to show an acceptable explanation for delay or that it’s fair and equitable in the circumstances to extend time. In the light of the decision in Ahearn’s [sic] case it is useful to set out in modified form the relevant principles in relation to the exercise of the Court’s discretion when considering an extension of time in a human rights application based upon those principles distilled by Wilcox J in Hunter Valley as follows:
1. There is no onus of proof upon an applicant for extension of time though an application has to be made. Special circumstances need not be shown, but the court will not grant the application unless positively satisfied it is proper to do so. The "prescribed period" of 28 days is not to be ignored (Ralkon v Aboriginal Development Commission (1982) 43 ALR 535 at 550).
2. It is a prima facie rule that the proceedings commenced outside the prescribed period will not be entertained (Lucic v Nolan (1982) 45 ALR 411 at 416). It is not a pre-condition for success in an application for extension of time that an acceptable explanation for delay must be given. It is to be expected that such an explanation will normally be given as a relevant matter to be considered, even though there is no rule that such an explanation is an essential pre-condition (Comcare v A'Hearn [1993] FCA 498; (1993) 45 FCR 441 and Dix v Client Compensation Tribunal (1993) 1 VR 297 at 302).
3. Action taken by the applicant other than by making an application to the court is relevant in assessing the adequacy of the explanation for the delay. It is relevant to consider whether the applicant has rested on his rights and whether the respondent was entitled to regard the claim as being finalised. (See Doyle v Chief of Staff (1982) 42 ALR 283 at 287).
4. Any prejudice to the respondent, including any prejudice in defending the proceeding occasioned by the delay, is a material factor militating against the grant of an extension. (See Doyle at p 287).
5. The mere absence of prejudice is not enough to justify the grant of an extension. (See Lucic at p 416).
6. The merits of the substantial application are properly to be taken into account in considering whether an extension of time should be granted. (See Lucic at p 417).
7. Considerations of fairness as between the applicant and other persons otherwise in a like position are relevant to the manner of exercise of the court’s discretion. (Wedesweiller v Cole (1983) 47 ALR 528).
Such principles were applied by Gray J in Pham v Commonwealth of Australia [2002] FCA 669, although in the context of s 46PO(2) of the Human Rightsand Equal Opportunity Commission Act 1986 (Cth).
19. The Court respectfully approves of McInnis FM’s articulation of the principles in relation to the discretion contained in s 44(2A)(a) of the AAT Act.
The applicable principles were discussed in Budd and Phillips in the context of subs 44(2A)(a) of the AAT Act rather than s 29. It is clear from the relevant authorities, however, that whilst they ought not be followed in a “slavish” way, these principles are also relevant in the context of s 29.[18] Other matters which have also been found to be relevant in the context of s 29 include the fact that there was a significant issue to be determined, the potential financial loss to an applicant, the length of the delay and ignorance of appeal rights.[19]
[18] Brown v Commissioner of Taxation (1999) 42 ATR 118.
[19] Pearce D C, Administrative Appeals Tribunal (3rd ed, LexisNexis Butterworths, 2013), pp 63 – 74, [5.6] – [5.25].
Whilst the merits of the substantial application are clearly a relevant consideration, recent authorities have also suggested that caution should be exercised in reaching a view on the merits of an application in the context of an extension of time application and that a court or tribunal should be “slow to reject an application for an extension of time … for no reason other than that the appeal, if prosecuted, would be unlikely – even very unlikely – to succeed.”[20]
[20] See Lukac v Linfox Armaguard Pty Ltd [2010] FCA 740 at [12] – [13] and the authorities there referred to.
Consideration
I propose to address each of the most relevant criteria in turn, with respect to both applications.
The extent of and reasons for the delay
Clearly, the delay in these matters is significant. Just under three years elapsed between when Mr Power withdrew his initial applications for review and when he lodged his extension of time applications on 2 September 2014.[21] By itself, the length of this period would militate against extensions of time being granted.
[21] As I have recorded above, Application 2014/4522 was subsequently dismissed and has been in a sense ‘replaced’ by Application 2015/3248.
As to the reasons for the lengthy delay, in his evidence and submissions, Mr Power explained that, partly because of the cancellation of his licences, he was unable to afford legal representation for his 2011 applications to the Tribunal. In addition, he said that he did not feel confident to represent himself, and believed in any event that he would be able to secure employment notwithstanding the cancellation decisions. He said it was a combination of these reasons which led him to decide to withdraw the 2011 applications to the Tribunal.
Mr Power further explained that he had applied for many jobs in the financial services sector between December 2011 and May 2012, but was unsuccessful in securing employment. He said that by approximately May 2012, it had become apparent to him that the cancellation decisions were effectively preventing him from securing employment. As a consequence of this, he made a formal request of the respondent in May 2012 for a letter stating that it had no objection to Mr Power or a related entity of Mr Power engaging in employment, opening or maintaining accounts with financial services providers or becoming an Authorised Representative of another financial services licensee. However on 14 June 2012, the respondent wrote back to him declining to provide such a letter.
Mr Power said that he next made a further attempt to seek legal assistance, including an application to JusticeNet on 24 September 2012 which was rejected on 18 October 2012. He subsequently lodged a complaint with the Commonwealth Ombudsman, however the Ombudsman refused to investigate. Mr Power said that the next action he took was to lodge a complaint against the respondent for defective administration under the Scheme for Compensation for Detriment caused by Defective Administration (CDDA Scheme), which he did in January 2013, but which did not result in payment of any compensation. He subsequently lodged a claim for an Act of Grace payment with the Department of Finance, which was also rejected. Roughly simultaneously with his CDDA Scheme application, he also decided to apply for his own financial services licence, in the name of GFM.
As alluded to in paragraph 3 above, in her reasons for the decision refusing that application, the respondent’s delegate made extensive reference to the 2011 cancellation decisions. It was this which ultimately prompted Mr Power to lodge the extension of time applications on 2 September 2014.
Mr Douglas urged me to conclude that Mr Power had not satisfactorily explained the delay in renewing his attempt to seek review of the 2011 decisions. Having regard to the evidence adduced by Mr Power at the first hearing, Mr Douglas conceded that it could not properly be said that Mr Power had not put forward any evidence as to the reasons for his delay. He stated:
… the respondent doesn’t put the position as stridently as no evidence for reasons for delay now, but still maintains the submission that there has been insufficient evidence for delay, and that you should regard Mr Power as someone who chose to stand on his rights in 2011, and that he ought to be held to that.[22]
Mr Douglas also submitted that:
… one can’t, except with caution, accept any of the things that Mr Power is now saying, because properly characterised, they are bases that have been put forward after the fact to try and make up for the fact that there really is no evidence to explain the delay.[23]
[22] Transcript, 20 February 2015, p 122.
[23] Transcript, 20 February 2015, p 131.
However, having carefully assessed his evidence, I have concluded that Mr Power was an honest witness who gave frank, plausible and consistent responses to the questions asked of him. I accept his evidence that he did not feel confident to proceed with his 2011 applications without legal assistance, and that he believed at that time that he would be able to obtain employment notwithstanding the 2011 cancellation decisions. I also accept his evidence as to the various steps he took in the period between withdrawing the 2011 applications and applying for an extension of time in these applications. While not all of those efforts were directed to challenging the 2011 cancellation decisions, I accept that they were directed toward ameliorating the effects of those decisions, and/or rectifying or improving his situation. I accept that for much if not all of the period between when he withdrew his 2011 applications and when he lodged his applications for an extension of time, Mr Power was taking steps which he believed would or may be effective in addressing the effects of the cancellation decisions upon him. In particular, he considered and to some extent pursued alternative legal avenues, and also made extensive and persistent efforts to obtain suitable employment, so as to restore his earning capacity.
I also accept that it was not until sometime after he had withdrawn his 2011 applications that Mr Power came to believe that the 2011 cancellation decisions had made it extremely difficult for him to obtain employment in his field of expertise, or related fields. I further accept that it was only when he received the respondent’s decision rejecting his GFM licence application that he formed the view that, unless he could challenge/overturn the 2011 cancellation decisions, he had little or no realistic prospect of working in his chosen field of financial services. I further accept that this in turn was one of the main reasons for him deciding to seek an extension of time to challenge the 2011 cancellation decisions.
I have therefore also concluded that Mr Power has largely explained the delay in lodging his current applications, by reference to his state of mind at the relevant times and the efforts which he made to effectively ameliorate or overcome the effects of the cancellation decisions. I have concluded that the explanation provided by Mr Power mitigates to some extent the significant delay, such that taken together, the length of and reasons for the delay do not militate heavily against the grant of an extension of time if this is otherwise justified.
With respect to application 2015/3248, as I have already noted, this was not lodged until 30 June 2015, approximately 10 months after the extension of time application in application 2014/4523. However, having regard to the matters set out in paragraphs 4 and 5 above, I consider that Mr Power has satisfactorily explained that additional delay.
Whether the applicant rested on his rights
As he took no action between 8 December 2011 and 2 September 2014 to alert the respondent to the fact that he still intended to seek review of the 2011 cancellation decisions (and he did not in fact have that intention during most of that period), I accept that Mr Power can be said to have “rested on his rights” to that extent. The respondent was entitled to assume that he was not intending to again contest the correctness of those decisions. Accordingly this consideration militates against the grant of extensions of time.
Prejudice to the respondent
In the particular circumstances which have arisen, the question of prejudice is complicated. That is because, as I have alluded to above, Mr Power has sought review within time of the respondent’s decision to refuse the GFM application. Therefore, regardless of the outcome of these applications, the respondent will confront the demands of that application.
Not only that, but in support of his submission that there was no utility in granting the extension sought by Mr Power in application 2014/4523, Mr Douglas submitted that it would be open to Mr Power in the GFM application to contest the correctness of the 2011 cancellation decisions, insofar as they were relevant to the matter at hand. In other words, insofar as Mr Power wished to argue that the conclusions of the delegate supporting the 2011 cancellation decisions were incorrect and that this in turn should lead to a different conclusion in the GFM matter, he was free to do so in the context of that matter.
As a matter of law, I accept that proposition. However, it also therefore follows that, even if extensions of time are not granted, it seems likely that the respondent will need to address arguments by Mr Power that the 2011 cancellation decisions were wrong and his licences should not have been cancelled. Mr Douglas submitted that different statutory provisions would be engaged if extensions of time were granted and the Tribunal was required to review the 2011 cancellation decisions. However, to the extent that Mr Power sought to argue in the GFM matter that the 2011 decisions were wrong and the Tribunal should make a finding to that effect, the statutory framework which applied to the 2011 decisions would be relevant.
In these circumstances, an issue arises as to the extent of the additional prejudice to the respondent in Mr Power being permitted to directly challenge the 2011 cancellation decisions on the basis of extensions of time being granted for him to lodge fresh applications with respect to those decisions. Arguably, that would be a more regular way to proceed in circumstances where the correctness of those decisions is disputed and where those decisions have been assumed to be correct for the purposes of a later decision. Perhaps more importantly, it may well prove more practical for the Tribunal to address the relevant issues directly in the context in which they arose, rather than indirectly in the context of a different decision made at a later time. It may also prove more effective from Mr Power’s point of view for those issues to be squarely before the Tribunal, which would minimise the possibility of relevance being raised as a barrier to the exploration of issues which Mr Power regards as relevant to both the cancellation decisions and the GFM decision.
In summary, I accept that there is significant prejudice to the respondent in being asked to defend the 2011 decisions more than three years after they were originally made, and in circumstances where it was entitled to assume that it would not be necessary for it to do so. However I also note that beyond an assertion that witnesses’ recollections will have faded, and evidence will have been “lost”, the respondent has not pointed to any specific and tangible prejudice, such as the unavailability of a particular witness, or particular documents.
In addition, I consider that the degree of prejudice is lessened to some extent by the fact that it is conceded by the respondent that the correctness of the 2011 cancellation decisions is potentially relevant to the GFM application and that it will be required to address the correctness of those decisions in that context in any event, albeit in a more limited way. Further, the prospect of the Tribunal being asked to make findings as to the correctness of the 2011 cancellation decisions without being in a position to squarely address all of the issues in the context in which they arose is an unattractive one, which has a degree of impracticality. In my view, it would be likely to lead to difficult questions arising in the GFM matter as to how far the Tribunal could or should go in addressing the correctness of the 2011 decisions.
In my view, the undesirability of that outcome must be weighed against the prejudice accruing to the respondent, such that the prejudice to the respondent carries less weight than it otherwise would. For these reasons, in the particular and unusual circumstances which have arisen, I consider that the acknowledged prejudice to the respondent does not militate as heavily against the grant of extensions of time as it would if it was not clear that the correctness of the 2011 decisions is likely to be agitated before the Tribunal in any event, even if extensions of time are not granted.
The merits of the substantive application
As I have acknowledged above, this is not the appropriate occasion for the Tribunal to attempt to assess the merits of the substantive applications in any detail. Suffice it to say, however, that I am satisfied that Mr Power’s substantive applications are not devoid of merit.
The 2011 cancellation decisions were made pursuant to subs 915C(1) of the Corporations Act 2001, which at the relevant time relevantly provided as follows:
Suspension or cancellation after offering a hearing
(1) ASIC may suspend or cancel an Australian financial services licence (subject to complying with subsection (4)) in any of the following cases:
(a) the licensee has not complied with their obligations under section 912A;
(aa) ASIC has reason to believe that the licensee will not comply with their obligations under section 912A;
…
At the relevant time, s 912A provided as follows:
General obligations
(1) A financial services licensee must:
(a) do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly; and
(aa) have in place adequate arrangements for the management of conflicts of interest that may arise wholly, or partially, in relation to activities undertaken by the licensee or a representative of the licensee in the provision of financial services as part of the financial services business of the licensee or the representative; and
(b) comply with the conditions on the licence; and
(c) comply with the financial services laws; and
(ca) take reasonable steps to ensure that its representatives comply with the financial services laws; and
(d) unless the licensee is a body regulated by APRA—have available adequate resources (including financial, technological and human resources) to provide the financial services covered by the licence and to carry out supervisory arrangements; and
(e) maintain the competence to provide those financial services; and
(f) ensure that its representatives are adequately trained, and are competent, to provide those financial services; and
(g) if those financial services are provided to persons as retail clients—have a dispute resolution system complying with subsection (2); and
(h) unless the licensee is a body regulated by APRA—have adequate risk management systems; and
(j) comply with any other obligations that are prescribed by regulations made for the purposes of this paragraph.
…
In deciding to cancel the licence of MPF, the matters relied upon by the delegate included:
(a)MPF’s failure to carry out appropriate background checks before appointing Authorised Representatives;[24]
(b)MPF’s failure to take reasonable steps to ensure its representatives complied with financial services laws;[25]
(c)MPF’s failure to ensure its representatives had the necessary knowledge and skills to provide financial product advice to retail clients;[26] and
(d)Mr Power, as the responsible manager of MPF, did not understand the obligations of a financial services licensee, including the applicable legal requirements.[27]
The delegate accordingly concluded:
I have found that MPF has failed to comply with its obligations under s 912A over an extended period. Rather than a proactive approach to compliance, much of Mr Power’s compliance activity has been reactive to ASIC’s concerns. I am satisfied that Mr Power does not adequately understand the obligations on a licensee under s 912A. In these circumstances, I have no confidence that MPF will discharge the duties and obligations imposed by s 912A on a provider of financial services.
By reason of the above matters, I am satisfied that ASIC has reason to believe that MPF will not comply with its obligations under s 912A.[28]
[24] Decision of 14 November 2011, p 10.
[25] Decision of 14 November 2011, p 20.
[26] Decision of 14 November 2011, p 23.
[27] Decision of 14 November 2011, p 30.
[28] Decision of 14 November 2011, p 31, [155] – [156].
After noting that the discretion to suspend or cancel MPF’s licence was therefore enlivened, the delegate proceeded:
I have found that MPF has not complied with its obligations under s 912A. I accept that the non-compliance was not deliberate. It arose from a lack of understanding of the obligations on a financial services licensee and the lack of an appropriate compliance system.
In these circumstances, taking into account the objects of the legislative scheme, I am satisfied that public interest considerations require that action be taken in respect of the AFS licence.
Should the AFS licence be suspended or cancelled?
In Sovereign, the Tribunal said at [84]:
A licence should only be suspended or cancelled if it is necessary to do so in order to accomplish the objects of the legislative scheme. A suspension will ordinarily be preferable if there is a reasonable prospect that the licence-holder can remedy the defects which prompted the concern. If there is no reasonable prospect of the issues being resolved, cancellation may be the appropriate course. The power to suspend or cancel should not be used merely to punish the licence-holder for transgressions.
This is not a matter where a suspension to enable MPF to address its deficiencies is appropriate. I have found that MPF has not complied with its obligations as a financial services licensee over an extended period. Mr Power, who was the responsible person during the period of non-compliance, continues to be the responsible person. I have found that Mr Power does not understand the obligations of a financial services licensee. I have found that ASIC has reason to believe that MPF will not comply with its obligations under s 912A. I have found that the commercial nature of the relationship with the CARs is incompatible with the obligations that MPF must comply with as a financial services licensee.
In these circumstances, I am satisfied that the appropriate order is to cancel the Licence.[29]
[29] Decision of 14 November 2011, pp 32-33, [162] – [167].
With respect to Mr Power’s personal licence, the delegate concluded that by reference to the matters she had considered in cancelling the licence of MPF, she was “not satisfied that Mr Power currently understands his obligations as a financial services licensee” and she was satisfied that “ASIC has reason to believe that Mr Power will not comply with his obligations under s 912A”. With respect to the question of suspension rather than cancellation, the delegate concluded:
This is not a matter where a suspension to enable Mr Power to address his deficiencies is appropriate. I have found that MPF has not complied with its obligations as a financial services licensee over an extended period. Mr Power was the responsible person during the period of non-compliance. I have found that Mr Power does not understand the obligations of a financial services licensee. I have found that ASIC has reason to believe that Mr Power will not comply with his obligations under s 912A. The commercial nature of the relationship between Mr Power and his ARs is incompatible with the obligations that Mr Power must comply with as a financial services licensee.
In these circumstances, I am satisfied that the appropriate order is to cancel the Licence.[30]
[30] Decision of 14 November 2011, p 6, [29] – [30].
As I understand his position at this early stage of the proceedings, although he does not dispute all of the breaches relied upon by the delegate, Mr Power disputes the correctness of the decision to cancel the licences upon a number of bases, including the following:
(a)Many of the breaches were committed by Authorised Representatives acting without his express authority or knowledge;
(b)The delegate acknowledged that the breaches were not deliberate;
(c)It is inherently extremely difficult for one person to control the actions of another, particularly in the absence of an employment relationship;
(d)He took appropriate action as soon as the breaches were brought to his attention;
(e)At the time his licences were cancelled he was in the process of attempting to have an additional responsible manager put on to the relevant licences, with a view to addressing the respondent’s concerns. However, the cancellation decisions were made before this application had been fully processed;
(f)The delegate was wrong to conclude that there was reason to believe that in the future MPF would not comply with its obligations under s 912A, or that Mr Power himself would not do so;
(g)The delegate was wrong to conclude that he did not understand the obligations of a financial services licensee; and
(h)In all the circumstances, including the prospect of the relevant breaches being remedied, it would have been more appropriate to suspend than to cancel the licences.
On the limited material before me, I accept that Mr Power has some prospects of successfully making out one or more of these arguments, and some prospects of persuading the Tribunal that one or both licences should not have been cancelled.
The effect on Mr Power
In the circumstances of this matter, I also consider it appropriate for the Tribunal to have regard to the effect on Mr Power if extensions of time are not granted.
In that context, I accept Mr Power’s evidence that the effect of the 2011 cancellation decisions on his life has been little short of catastrophic. I accept that following the cancellation decisions, despite significant efforts to obtain employment, he remained unemployed for the whole of 2012, 2013 and 2014 until he was finally able to find some part-time administration work in a nursing home. I accept on the basis of the evidence before me that the 2011 cancellation decisions have been a significant reason for Mr Power’s inability to obtain employment during that period. I also accept Mr Power’s evidence that his marriage broke down in the aftermath of the cancellation decisions, and that he was also forced to sell his house as a result of separation from his wife.
Whilst of course some of this damage is irreversible, I accept that if he was successful in having the cancellation decisions set aside, this would be likely to significantly increase Mr Power’s prospects of earning a living in the financial services sector. I also accept that assuming he was able to persuade the Tribunal to make findings in the context of the GFM matter that the 2011 cancellation decisions were incorrect, but was not able to get those decisions set aside, that result would not be nearly as efficacious for him. Even if he was successful in the GFM application, I accept that he would suffer ongoing detriment as a result of having had his licences cancelled in 2011.
In the result, I therefore accept that there is a great deal at stake for Mr Power in these applications and if he is not granted extensions of time, and is not permitted to challenge the 2011 cancellation decisions, he will be in a significantly worse position than if extensions of time were granted. If extensions are not granted, he will have effectively lost any opportunity to challenge the 2011 cancellation decisions, or prevent many of the ongoing consequences of these.
Fairness and finality
For completeness, I accept that on the face of things, consideration of fairness as between Mr Power and others in a like position would tend to militate against extensions of time being granted. I also accept that there is a public interest in the finality of administrative decisions. Having said that however, I also consider that this matter has some unusual features, not the least of which being the relevance of the 2011 decisions to the more recent decision rejecting the licence application of GFM. Given the presence of this fact, which distinguishes Mr Power’s circumstances from those of most others in an otherwise like position, I do not regard these considerations as militating heavily against the grant of extensions of time.
Overall assessment
The considerations in these applications are very finely balanced. On the one hand, the delay is significant and I accept that there will be prejudice to the respondent if extensions of time are granted. On the other hand, it appears the correctness of the 2011 cancellation decisions is an issue that will be canvassed in any event in the GFM application, which was lodged within time. In addition, I consider that Mr Power has largely explained his delay in seeking to again challenge the cancellation decisions, part of that explanation being that it took time for him to fully realise all of the implications and consequences of the cancellation decisions for him.
In addition, while the respondent has contended that the correctness of the 2011 decisions can be canvassed in the context of the GFM matter, there is a degree of undesirability attaching to the prospect of the Tribunal being asked to consider the correctness of the 2011 cancellation decisions without being in a position to squarely address the issues in the context in which they arose, or disturb those decisions. Perhaps most significantly, I also accept that the cancellation decisions have had a dramatically adverse effect on Mr Power’s life, and his earning capacity in particular, and that if those decisions remain undisturbed, they are likely to continue to have significantly adverse effects on him. Accordingly, in my view, the effect on him of not being permitted to seek review of those decisions outweighs any prejudice to ASIC in having to meet the applications out of time.
On balance, having weighed the competing considerations, I have concluded that in the relatively unusual circumstances which have arisen, it is “reasonable in all the circumstances” to extend the time in which Mr Power may bring these applications, and that I should accordingly grant Mr Power’s applications for extensions of time. I note that, as Mr Power has himself acknowledged, there is less utility in granting him an extension of time with respect to the MPF cancellation decision, as MPF was deregistered on 23 November 2014.[31] However, it would be irregular and arguably inappropriate for the decision relating to Mr Power personally to be set aside but for the decision relating to MPF to stand, in circumstances where the reasons for cancelling the MPF licence were heavily relied upon in the reasons given for cancelling Mr Power’s personal licence. Further, the considerations relevant to each matter are essentially the same and have the same potential bearing on the GFM application. Accordingly, I consider it appropriate to grant extensions of time with respect to both applications. As no application for Review has yet been lodged in application 2015/3528, I propose to grant an extension until 14 September 2015 for the lodgement of that application.
[31] Respondent’s Written Submissions, dated 18 November 2014, [6].
I note that, subject to the views and submissions of the parties, it will be open to the Tribunal to order that these applications be heard together with the GFM application, which would avoid any duplication of evidence as between the two sets of proceedings.
DECISION
In application 2014/4523, the applicant’s application for an extension of time in which to seek review of the respondent’s decision of 14 November 2011 is granted pursuant to subs 29(7) of the AAT Act. Time is extended until 2 September 2014, being the date when he lodged his Application for Review.
In application 2015/3248, the applicant’s application for an extension of time in which to seek review of the respondent’s decision of 14 November 2011 is also granted pursuant to subs 29(7) of the AAT Act. Time is extended until 14 September 2015, giving him 14 days in which to lodge an Application for Review in that matter.
I certify that the preceding 76 (seventy-six) paragraphs are a true copy of the reasons for the decision herein of Deputy President K Bean. ........................................................
Associate
Dated 31 August 2015
Dates of hearing 20 January 2015, 20 February 2015 and 30 July 2015 Applicant In person Counsel for the Respondent Mr M Douglas Solicitors for the Respondent Australian Securities and Investments Commission Chief Legal Office
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