Re Donald and Australian Securities and Investment Commission

[2001] AATA 622

CATCHWORDS – CORPORATIONS LAW – Dealers representative – Banning Order – Whether Tribunal has the power to direct the respondent to accept a written enforceable undertaking from the applicant – identification of decision under review – Tribunal's powers and discretions – decision set aside.

Administrative Appeals Tribunal Act 1975 – ss 25, 27, 43
Australian Securities and Investment Commission Act 1989 – ss 5, 11, 13, 19, 28, 40, 43, 49, 51, 72, 73, 74, 75, 88, 89, 90, 91, 93, 93AA, 244
Corporations Law – ss, 806, 807, 809, 824-826, 828, 829, 830, 831, 832, 833, 836, 837, 1317B
Income Tax Assessment Act 1936 – ss 82KH, 82KL, 170, 177C, 177F, 200B
Safety, Rehabilitation and Compensation Act 1988 – s 57
Social Security Act 1991 – s 115E

Comcare v Burton (1998) 157 ALR 522; (1998) 50 ALD 846; (1998) 28 AAR 70
Fletcher v Commissioner of Taxation (1988) 19 FCR 442; (1988) 84 ALR 295; (1988) 16 ALD 280; (1988) 88 ATC 4834; (1988) 19 ATR 1765
Lees v Comcare (1999) 56 ALD 84; (1999) 29 AAR 350
Re Control Investment Pty Ltd and Australian Broadcasting Commission (No. 2) (1981) 3 ALD 88
Re DeMarco and Comcare (1996) 43 ALD 654; (1996) 23 AAR 467
Re Health Insurance Commission and Hobbes and Comcare (1990) 21 ALD 229; (1990) 12 AAR 285
Secretary, Department of Social Security v Riley (1987) 17 FCR 99; (1987) 76 ALR 393; (1987) 13 ALD 608; (1987) 7 AAR 452
Stevenson v Commissioner of Taxation (1991) 29 FCR 282; (1991) 91 ATC 4476; (1991) 22 ATR 56

ADMINISTRATIVE APPEALS TRIBUNAL     )
  )          V2000/1256
GENERAL ADMINISTRATIVE DIVISION      )

Re                  ANDREW WILLIAM DONALD

Applicant

AndAUSTRALIAN SECURITIES & INVESTMENTS COMMISSION

Respondent

DECISION AND REASONS FOR DECISION [2001] AATA 622

Tribunal  Miss S A Forgie (Deputy President)
  Mr D Elsum (Member)
  Mr W G McLean (Member)

Date  2 July, 2001

Place  Melbourne

Decision  The Tribunal:

1.sets aside the decision of the respondent dated 20 July, 1999; and

2.substitutes a decision that:

(1)a banning order be made prohibiting the applicant from doing any act as a dealers representative from 20 July, 1999 until 22 November, 2000; and

(2)the Commission accept a written undertaking from the applicant to the effect that the applicant:

(a)enrol in and complete the Business and Finance Practice Industry and/or the Financial Markets Law, Regulation and Compliance courses offered by the Securities Institute;

(b)co-operate with Australian Securities Exchange and the respondent in the preparation and presentation of seminars which will consider issues of law, practice and procedure relevant to acting as a Designated Trading Representative;

(c)undertake for a period of three and a half years from the date of the undertaking not to create, or do anything that is likely to create, a false or misleading appearance of active trading in any securities on a stock market or a false or misleading appearance with respect to the market for, or the price of, any securities; and

(d)during the term of the undertaking, give a copy of the undertaking to all licensed dealers by whom he is employed.

S A FORGIE
  Deputy President

REASONS FOR DECISION

On 4 May, 2001, we published reasons in which we made a number of findings of fact relating to an application made by the applicant, Mr Andrew William Donald, for review of a decision of the respondent, the Australian Securities and Investment Commission ("the Commission").  We also set out a possible course of action and, in the absence of any agreement between them as to the appropriate course to follow, invited the parties to make further submissions.  Those submissions were to address both our power to follow the course we had outlined in our reasons and, if we have the power, the appropriateness of that course.  Neither matter was addressed at the initial hearing.  In view of the time constraints that have attended this hearing both because of the members' commitments and the expiration of some appointments on 24 June, 2001, this was thought to be the most expedient manner in which to proceed.  As there was no agreement between the parties, further submissions were heard on 21 June, 2001 and a decision given orally.  Although Mr Elsum is no longer a member of the Tribunal, he agreed with the reasons which we now set out.

1. At the resumed hearing, Mr Moshinski QC represented Mr Donald with Mr Murley of counsel while Mr Waller of counsel represented the Commission.  No further evidence was given.

THE COMMISSION'S DECISION

1. The Commission's decision, which was dated 20 July, 1999, was to make a banning order prohibiting Mr Donald from doing an act as a representative of a dealer for a period of four years from that date. That decision was made pursuant to s. 829 of the Corporations Law ("the Law").

THE TRIBUNAL'S DECISION

1. The decision that we made on 21 June, 2001 was to:

1.set aside the decision of the respondent dated 20 July, 1999; and

2.substitute a decision that:

(1)a banning order be made prohibiting the applicant from doing any act as a dealers representative from 20 July, 1999 until 22 November, 2000; and

(2)the Commission accept a written undertaking from the applicant to the effect that the applicant:

(a)enrol in and complete the Business and Finance Practice Industry and/or the Financial Markets Law, Regulation and Compliance courses offered by the Securities Institute;

(b)co-operate with Australian Securities Exchange and the respondent in the preparation and presentation of seminars which will consider issues of law, practice and procedure relevant to acting as a Designated Trading Representative;

(c)undertake for a period of three and a half years from the date of the undertaking not to create, or do anything that is likely to create, a false or misleading appearance of active trading in any securities on a stock market or a false or misleading appearance with respect to the market for, or the price of, any securities; and

(d)during the term of the undertaking, give a copy of the undertaking to all licensed dealers by whom he is employed.

1. Power to accept an enforceable undertaking is given to the Commission under s. 93AA of the Australian Securities and Investments Commission Act 1989 ("the Act").  The decision of 21 June, 2001 was necessarily based on an assumption that we had power to make it.  We set out below the reasons why we have concluded that we have that power but, lest we be wrong, have also indicated the decision that we would otherwise have given.

THE SUBMISSIONS REGARDING THE TRIBUNAL'S POWER

1. Mr Moshinski submitted that the Tribunal has power to direct the Commission to accept an enforceable undertaking from Mr Donald. He relied particularly on s. 43(1) of the Administrative Appeals Tribunal Act 1975 ("AAT Act") and on Fletcher v Commissioner of Taxation (1988) 19 FCR 442 (Lockhart, Wilcox and Burchett JJ), Stevenson v Commissioner of Taxation (1991) 29 FCR 282 (Jenkinson J) and Re Control Investment Pty Ltd and Australian Broadcasting Commission (No. 2) (1981) 3 ALD 88 (Davies J).

1. Mr Waller submitted that the Tribunal does not have power to accept an enforceable undertaking under s. 93AA of the Act. He pointed out that s. 43 of the AAT Act sets out the Tribunal's powers on reviewing a decision. Those powers are to affirm, vary or set aside a decision which the Tribunal has power to review. If the Tribunal sets aside the decision, it must either substitute a decision or remit the decision to the decision-maker to reconsider the matter in accordance with its directions or recommendations. Section 43 is not a source of jurisdiction. A decision that Mr Donald be invited to enter an enforceable undertaking does not come within any of the Tribunal's powers set out in s. 43. 

1. Section 43(1) provides that "… the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision …" but it may only do so "For the purpose of reviewing a decision…".  The Tribunal's powers must be limited to those that are relevant for the making of the decision under review.  Referring to the judgement of the Full Court of the Federal Court in Fletcher v Commissioner of Taxation, Mr Waller submitted that:

"As a matter of principle, it must be correct, … that the powers and discretions referred to by s 43(1) are the powers and discretions vested in the original decision-maker for the purposes of making the decision under review. They do not include any powers and discretions which may be vested in the decision-maker for some other purpose. If authority is needed for this conclusion it is to be found in Repatriation Commission v O'Brien (1985) 155 CLR 422 at 429: see also Secretary, Department of Social Security v Riley (1987) 17 FCR 99." (page 452)

1. Relying on this passage, Mr Waller submitted that the Tribunal cannot make another decision that the decision-maker might have had open to it but did not make.  He also relied on the judgement of Finn J in Comcare v Burton (1998) 157 ALR 522. His Honour in that case considered whether the Tribunal could determine that Ms Lees was entitled to compensation for permanent impairment when her application had been to review a reviewable decision that she was not entitled to be reimbursed the taxi fares she had incurred in travelling to and from medical treatment for an injury for which Comcare had accepted liability. Mr Waller submitted that the effect of Finn J's judgement was that Comcare had not made any determination regarding Ms Lees' permanent impairment and the fact that the parties were before the Tribunal did not mean that it could determine a substantive issue not considered by Comcare. Decisions about the reimbursement of taxi fares and permanent impairment were separate decisions both capable of being reviewable decisions. Applying the principles enunciated by Finn J, Mr Waller submitted, there was only one decision and that related to the imposition of the banning order. That was the only decision capable of being reviewed by the Tribunal as a decision under s. 93AA to accept an enforceable undertaking was not capable of being reviewed by the Tribunal as no decision in that regard had been made by the Commission. 

1. Mr Waller relied also on the judgement of Sheppard J in Secretary, Department of Social Security v Riley (1987) 17 FCR 99 (Northrop, Sheppard and Jenkinson JJ) where His Honour said that "… the wide powers which are conferred upon the Administrative Appeals Tribunal by s 43 do not empower it to review a totally different decision" (page 105).  The Tribunal is obliged to answer the same question, or questions, as were before the original decision-maker (see also Comcare v Burton at 528). In making a decision under s. 829, the Commission could not have decided to accept an enforceable undertaking from Mr Donald. Had he proffered such an undertaking, the Commission could have decided whether or not to accept it but that would have been an exercise of its discretion separate and distinct from that it exercised under s. 829. 

LEGISLATIVE FRAMEWORK

The source of the Tribunal's jurisdiction

1. Section 25 of the AAT Act does not confer any jurisdiction on the Tribunal but it is fundamental to any consideration of the Tribunal's jurisdiction to review a decision. It necessarily precedes any consideration of those who may apply to the Tribunal for review of a decision under s. 27 for that section assumes that the AAT Act or another enactment has provided that an application may be made to the Tribunal for the review of a decision. In so far as it is relevant in this case, s. 25(1) provides that:

"An enactment may provide that applications may be made to the Tribunal:

(a)for review of decisions made in the exercise of powers conferred by that enactment;…"

1. Section 25(4) provides the necessary corollary to s. 25(1) when it provides that the "... Tribunal has power to review any decision in respect of which application is made to it under any enactment." The general powers of the Tribunal are found in other provisions of the AAT Act.

1. The remaining ten sub-sections of s. 25 go on to refine the general proposition made in s. 25(1) and to provide that an enactment may modify the operation of any particular provision of the AAT Act. Of particular interest in this case is s. 25(3) which provides:

"Where an enactment makes provision in accordance with subsection (1), that enactment:

(a)shall specify the person or persons to whose            decisions the provision applies;

(b)may be expressed to apply to all decisions of a person, or to a class of such decisions; and

(c)       may specify conditions subject to which applications may be made."

1. It is clear from s. 25 generally and from ss. 25(1) and 25(3) which I have set out that Parliament intended that the Tribunal's power of review be defined and circumscribed by the enactment making provision for that review.  If that were not the case, there would have been no need for Parliament to have provided that, for example, the enactment may apply to all of the decisions of a person whom it specifies or to a class of those decisions.

1. This interpretation is consistent with the statements made by the Attorney-General in his Second Reading speech in introducing the AAT Bill in the House of Representatives when he said:

"The intention of the present Bill is to establish a single independent tribunal with the purpose of dealing with appeals against administrative decisions on as wide a basis as possible.  The Bill would establish the Tribunal and provide for its membership, powers and procedures.  The Tribunal thus established would be a standing body that can be given jurisdiction as new legislation creating administrative discretions is introduced.  At the same time, the Government proposes to review discretionary powers under existing legislation to determine whether there should be appeals to the Tribunal against decisions in the exercise of those discretions, and whether existing provisions for appeal would be brought within the framework of the new Tribunal." (Hansard, House of Representatives, 6 March, 1975, page 1187)

1. The effect of s. 25 is that regard must be had to the terms of the enactment to decide whether or not the Tribunal has been given jurisdiction. In this case, regard must be had to the Law and also to the Act. As the Commission made its banning order under s. 829 of the Law, we will consider first the Law. Section 1317B provides that, subject to Part 9.4A, applications may be made to the Tribunal for review of a decision made under the Law by, among others, the Commission. Certain decisions are excluded but not those made under s. 829 or under any other section in Chapter 7 of which s. 829 is a part.  Part 9.4A is concerned generally with review by the Tribunal of certain decision and is not relevant in this case. The Tribunal may, therefore, review decisions made under s. 829 of the Law.

1. A decision to accept an enforceable undertaking is made under s. 93AA of the Act. Section 244(2) of the Act provides that applications may be made to the Tribunal for review of a decision by the Commission to make an order under ss. 72, 73 or 74, to make an order under s. 75(1) varying an order in force under Division 8 of Part 3 or to refuse to vary or revoke an order in force under that Division. The Tribunal may not, therefore, review decisions made under s. 93AA of the Act.

Powers of the Commission

1. Section 11 of the Act sets out the functions and powers of the Commission. In addition to the functions and powers conferred on it by or under the Corporations Act 1989, the Corporations Law of the Capital Territory or, subject to certain exceptions, the Act (s. 11(1)), it has "… any functions and powers that are expressed to be conferred on it by a national scheme law of another jurisdiction" (s. 11(7)).  A "national scheme law" means:

"(a)     the following:

(i)the Corporations Act 1989;

(ii)the Corporations Law of the Capital Territory;

(iii)this Act (other than section 12A and Division 2 of Part 2); or

(b)a law of another jurisdiction that corresponds to an Act or Law referred to in paragraph (a)" (s. 5(1))

A "national scheme law of this jurisdiction" means an Act or Law referred to in paragraph (a) of the definition of a "national scheme law" (s. 5(1)).  While not defined, it would follow that the expression "a national scheme law of another jurisdiction" must mean a law referred to in paragraph (b) of the definition of a "national scheme law".

The Commission's powers to make banning orders

1. Although we did so in our earlier reasons, we will again set out the relevant provisions of Chapter 7 of the Law. That chapter deals with securities and is divided into various parts. Each part deals with a separate aspect of the securities industry. Part 7.3 deals with the participants in the securities industry.  So, for example, it requires that those who carry on a securities business or an investment advice business must be licensed as such and sets out the obligations of being licensed and the rights of those who deal with unlicensed dealers and investment advisers (Divisions 1 and 2).

1. Division 3 regulates representatives of dealers and investment advisers. It sets out the obligations of the licensed dealer or investment adviser in relation to those holding his or her proper authority and the obligations of the representative.  A body corporate may not act as a representative of a dealer or investment adviser (s. 809).  A person may act as a representative of a dealer but only if the dealer holds a dealer's licence and the representative holds a proper authority from the dealer (s. 806).  He or she may act as a representative of an investment adviser only if the investment adviser is either a dealer holding a dealer's licence or holds an investment adviser's licence and the representative holds a proper authority from the investment adviser (s. 807). 

1. Division 4 regulates the liability of licensed dealers and investment advisers for the conduct of their representatives while Division 5 provides for the exclusion of persons from the securities industry.  Sections 824 to 826 of Division 5 provide for those circumstances in which the Commission may revoke a licence held by a dealer or an investment adviser.  In certain circumstances, the Commission may also issue a banning order under s. 828 if the dealer or investment adviser is a natural person.

1. Section 829 provides for those circumstances in which the Commission may make a banning order against a natural person who is not a licensed dealer or investment adviser but is a representative of a licensed dealer or of an investment adviser.  Subject to the Commission's having given the person an opportunity to make submissions and give evidence at a hearing before the Commission, the Commission may make a banning order if:

"(a)     he or she becomes an insolvent under administration;

(b)he or she is convicted of serious fraud;

(c)he or she becomes incapable, through mental or physical incapacity, of managing his or her affairs;

(d)he or she contravenes a securities law;

(e)the Commission has reason to believe that he or she is not of good fame and character;

(f)the Commission has reason to believe that he or she has not performed efficiently, honestly and fairly the duties of:

(i)a representative of a dealer; or

(ii)a representative of an investment adviser; or

(g)the Commission has reason to believe that he or she will not perform efficiently, honestly and fairly the duties of:

(i)a representative of a dealer; or

(ii)a representative of an investment adviser."

(s. 829 and see also s. 837)

1. Where the Commission decides to issue a banning order, it must do so by a written order.  It may:

"… prohibit the person:

(a)       in any case – permanently; or

(b)except where the Commission is empowered by virtue of paragraph 828(c) or 829(e) to make the order – for a specified period;

from doing an act as:

(c)a representative of a dealer;

(d)a representative of an investment adviser; or

(e)a representative of a dealer or of an investment adviser;

whichever the order specifies." (s. 830(1))

1. Whether the banning order is made permanently or for a specified period, it may include a provision that:

"… permits the person, subject to such conditions (if any) as are specified, to do, or to do in specified circumstances, specified acts that the order would otherwise prohibit the person from doing." (s. 831(1))

1. Subject to the person's being given an opportunity to appear at a hearing and to make submissions pursuant to s. 837, the Commission may, at any time, vary a banning order against a person by, among other matters, adding a provision permitting a person to undertake specified acts as set out in s. 831(1) (s. 831(2)).

1. The only other way in which the Commission may vary or revoke a banning order is in accordance with ss. 832 and 833 (s. 830(2)).  It may not grant a dealer's licence or an investment adviser's licence to a person if a banning order prohibits that person from doing an act as a representative of a dealer or of an investment adviser (s. 836).

The Commission's powers to accept an undertaking in the context of Part 3 of the Act

1. Part 3 of the Act is headed "Investigations and Information-gathering".  Each division in that Part is concerned with a separate aspect of these matters.  Division 1, for example, sets out the circumstances in which the Commission may make an investigation.  In general terms, that division provides that the Commission may make such investigation as it thinks expedient for the due administration of a national scheme law where it has reason to suspect that certain defined events have occurred. 

1. The defined events are that there may have been a contravention of a national scheme law or a contravention of a law of the Commonwealth or of a State or Territory where the contravention concerns the management or affairs of a body corporate or managed investment scheme or involves fraud or dishonesty and the contravention relates to a body corporate or managed investment scheme or to securities or futures contracts.  (s. 13(1))

1. Division 2 sets out that the Commission may examine a person where it has reasonable grounds for suspecting or believing that a person can give information relevant to a matter that it is investigating, or is to investigate, under Division 1 (s. 19(1)). 

1. Division 3 sets out the Commission's powers regarding the inspection of books.  Subject to four exceptions, the Commission may inspect books for the purposes of the performance or exercise of its functions or powers under a national scheme law of this jurisdiction, for ensuring compliance with those laws, in relation to alleged or suspected contraventions of among others, those laws, or for the purposes of investigation under Division 1 (s. 28).  The Commission's powers under Division 4 to require the disclosure of specified information are similarly limited to its performing or exercising its functions or powers under a national scheme law of this jurisdiction, for ensuring compliance with those laws, in relation to alleged or suspected contraventions of among others, those laws, or for the purposes of investigation under Division 1 (s. 40).

1. Division 5 sets out those circumstances in which the Commission may cause a prosecution to be begun. The Commission may only do so if, as a result of an investigation or from a record of an examination conducted under Part 3, or a corresponding law, it appears to the Commission that a person may have committed an offence against a national scheme law of this jurisdiction, or a relevant previous law of this jurisdiction, or of Division 2 of Part 2 of the Act and the Commission decides that the person ought to be prosecuted (s. 49(1)). 

1. Subject to certain exceptions, Division 6 gives the Commission powers to hold hearings for the performance or exercise of any of its functions and powers under a national scheme law of this jurisdiction (s. 51(1)).

1. Division 7 is concerned with offences relating to compliance with Part 3 and Division 8 is concerned with the Commission's powers where there is non-compliance with the Part.  Division 9 makes provision for the evidentiary use that may be made of material obtained by the Commission under other Divisions of Part 3.

1. Division 10, which is headed "Miscellaneous", sets out a number of provisions concerned with the manner in which the Commission exercises its powers under Part 3.  For example, it modifies the application of the Crimes Act 1914 and the Evidence Act 1995 (s. 88) and provides for the payment, and recovery of, certain expenses (ss. 89, 90 and 91).

1. Section 93AA comes within Division 10 and is concerned with written undertakings.  It provides that:

"(1)     The Commission may accept a written undertaking given by a person in connection with a matter in relation to which the Commission has a function or power under this Act.

(2)       The person may withdraw or vary the undertaking at any time, but only with the consent of the Commission.

(3)       If the Commission considers that the person who gave the undertaking has breached any of its terms, the Commission may apply to the Court for an order under subsection (4).

(4)       If the Court is satisfied that the person has breached a term of the undertaking, the Court may make all or any of the following orders:

(a)an order directing the person to comply with that term of the undertaking;

(b)an order directing the person to pay to the Commonwealth an amount up to the amount of any financial benefit that the person has obtained directly or indirectly and that is reasonably attributable to the breach;

(c)any order that the Court considers appropriate directing the person to compensate any other person who has suffered loss or damage as a result of the breach;

any other order that the Court considers appropriate."

1. Section 93 relates to the application of Part 3.  First, it provides that "Except as expressly provided, nothing in this Part limits the generality of anything else in this Part" (s. 93(1)).  Second, it provides that:

"The functions and powers that this Part confers are in addition to, and do not derogate from, any other function or power conferred by a law of the Commonwealth or of this or any other jurisdiction." (s. 93(2))

CONSIDERATION

1. We will consider first the principles to be drawn from the authorities to which we have been referred.  Starting with the most recent, we have set out the facts in Comcare v Burton in paragraph 9 above.  Finn J, whose judgement was later upheld on appeal (Lees v Comcare (1999) 56 ALD 84) first set out the provisions of s. 43(1) of the AAT Act. His Honour agreed with the proposition put to him on behalf of Comcare that, before s. 43(1) could be applied, it was first necessary to determine the decision under review. That was so, he said, for s. 43(1) "… confers power on the tribunal in relation to matters in which it has jurisdiction.  It is not itself a source of jurisdiction." and "… is subject to the limitation that it is 'for the purpose of reviewing a decision'…" (page 528).  In the context of the Safety, Rehabilitation and Compensation Act 1988 ("SRC Act"), he concluded that the Tribunal's jurisdiction is limited in two ways:

"… (1) By virtue of s 25 of the AAT Act and s 64 of the SRC Act its province is limited to reviewing what under the SRC Act is a 'reviewable decision'. (2) To be constituted such a decision under the SRC Act, the process of determination and reconsideration must have been engaged in – and then only in respect of those sections of the statute that can give rise to a 'determination': SRC Act ss 60, 62. Both forms of limitation, but particularly the latter, necessitate that it be ascertained what is the particular 'reviewable decision' that the tribunal is to be review: Secretary, Department of Social Security v Riley (at FCR 105). The process of reviewing that decision is to occur in the setting of the question(s) that gave rise to the decision. And while in that process the tribunal can exercise its s 43(1) powers, it nonetheless is obliged to answer the same question(s) as was (were) before the reconsideration decision-maker: Hospital Benefit Fund of Western Australia v Minister for Health, Housing and Community Services (at FCR 234)." (page 528)

1. Finn J then proceeded to identify the decision under review:

"… It may well be the case that Ms Lees is able to claim some number of the types of compensation specified in the SRC Act given the nature and consequences of her injury and her actual circumstances. But whatever the claims she may be able to make, what she has done was to seek the determination of a quite particular question – that of payment of taxi fares under s 16 of the Act. The determination and reconsideration of that question has created the conditions which gave the tribunal jurisdiction to address that particular question. At the time of the primary decision no express request of hers had raised, as a practical matter, the consideration as well of her actual entitlement (if any) to compensation for permanent impairment.

Even if it is the case that Comcare of its own motion was obliged to determine on the facts from time to time her entitlements to particular benefits from time to time (irrespective of whether Ms Lees has actually adverted to them: cf Commonwealth v Ford (at 327)) Comcare has not as yet done so in relation to compensation for permanent impairment. At best – and I make no finding on this – that failure might be shown to be such in the circumstances as to amount to a refusal to make a determination under s 24 of the SRC Act and hence constitute a 'decision' for the purposes of the AAT Act and thus the SRC Act: see AAT Act s 3(3)(a); SRC Act s 60 'decision'. But all that could possible flow for present purposes from a decision being so found would be that a s 62 SRC Act reconsideration could be had. Only if that had occurred – which it has not – would there be a reviewable decision such as would give the tribunal jurisdiction to entertain consideration of compensation for permanent impairment. I would note in passing that it is the need for this additional step in the SRC Act review process – a step not contained in the Compensation (Commonwealth Government Employees) Act 1971 (Cth) - that precludes the tribunal from acting as Commonwealth v Ford would otherwise allow." (pages 528-529)

1. He went on to consider the scheme of the legislation and concluded that:

"… the scheme of the SRC Act itself is opposed to the jurisdiction asserted in the second respondent's contentions. While Comcare's acceptance of liability resulted in its being obliged to pay compensation to Ms Lees, that liability was to pay 'in accordance with this Act': SRC Act s 14. While Pt V of the Act allows Ms Lees to make a claim or claims for compensation, both Pt II (types of compensation) requires and Pt VI (reconsideration and review of determinations) presupposes, that before a particular type of compensation is paid, or for that matter denied to, Ms Lees, Comcare will have made a decision in relation to her entitlement to that type of compensation. As and when entitlement to such a type of compensation becomes an actual question for Comcare (either because of the claim made by Ms Lees or because of its own appreciation of the facts), it is then that the making of a decision is called for. And when so made, the reconsideration and review process can begin. That process is an integral part of SRC Act's pathway to the tribunal. It cannot be avoided by means of the jurisdiction asserted by the tribunal in this matter." (page 529)

1. The same approach had earlier been adopted by the Full Court of the Federal Court in the case of Fletcher v Commissioner of Taxation.  As the headnote states, "The applicant taxpayers had claimed certain deductions in respect of elaborate arrangements into which they had entered respecting certain annuities.  The respondent Commissioner had rejected their claims for deductions and, subsequently, had disallowed their objections in respect of his decision to reject their claims. …" (page 442). The Court regarded the Tribunal's decision as having rejected the Commissioner's argument that the transactions effected by the arrangements were shams and so non-deductible under s. 82KL of the Income Tax Assessment Act 1936 ("ITA Act").  The Tribunal had taken the view that the interest payments claimed as deductions were not "eligible relevant expenditure" within the meaning of s. 82KH(1F) of the ITA Act and so had rejected the Commissioner's argument under s. 82KL. 

1. The Tribunal did, however, consider the matter under s. 177F(1), which formed part of Part IVA of the ITA Act. That Part deals with schemes to reduce income tax. Section 177C sets out what is meant by the expression "obtaining a tax benefit" and s. 177F gives to the Commissioner a discretion to cancel a tax benefit obtained by a taxpayer in connection with a scheme to which the Part applies.  The applicants contended that the Tribunal was not entitled to consider the matter under s. 177F. 

1. Following the passage to which Mr Waller referred (see paragraph 8 above), the Court continued:

"However, we do not think that it follows that, in the present case, the Tribunal lacked jurisdiction to exercise the discretion conferred upon the Commissioner by s 177F(1). It is necessary to examine closely the relevant statutory provisions. Section 166 of the Income Tax Assessment Act empowers the Commissioner, from the taxpayer's return and from any other information in his possession, to 'make an assessment of the amount of the taxable income of any taxpayer, and of the tax payable thereon'. There is no doubt that, in taking that step, the Commissioner is entitled, in a proper case, to exercise the discretion conferred upon him by s 177F(1). That latter section specifically provides for including particular sums 'in the assessable income of the taxpayer' and that a 'deduction … shall not be allowable to the taxpayer'. Section 185 provides for the making of an objection by a 'taxpayer dissatisfied with any assessment'. Thereafter, by virtue of s 186, the Commissioner incurs a duty to consider the objection, to disallow it or to allow it either wholly or in part, and to notify the taxpayer of his decision. In considering the objection, the question for the Commissioner is the correctness of the original decision, that question being considered in the light of the terms of the objection but taking account of all the information then available to the Commissioner regarding the amount of the taxable income of the taxpayer and the amount of the tax payable thereon. It may well happen, for example, that, between the date of the original assessment and the date of determination of an objection, new information comes to the Commissioner or that there is some change in the relevant law. Subject to the limitations imposed by s 170 of the Act, these are matters properly to be taken into consideration by the Commissioner, in any case, in determining whether to issue an amended assessment. As the issue of an amended assessment is a possible result of the consideration by the Commissioner of an objection to an assessment, it must be appropriate for the Commissioner to take account of such matters in determining an objection to an assessment.

It follows that, in determining an objection to an assessment, the Commissioner is entitled to make a determination under s 177F of the Act; and thereafter to give effect to that determination by an appropriate decision under s 186.

By force of s 43 of the Administrative Appeals Tribunal Act, the Tribunal has all the powers and discretions that are conferred by s 186 of the Income Tax Assessment Act upon the Commissioner. In exercising those powers and discretions the Tribunal was bound to consider the facts as they were proved in evidence before the Tribunal, making the decision which, upon that evidence and at that time, was the correct or preferable decision to be made in considering the objection. The Tribunal was not confined either to the material which was before the Commissioner, as primary decision-maker, or the events which had occurred up to that time: see Drake (Supra) at 419; Nevistic v Minister for Immigration and Ethnic Affairs (1981) 51 FLR 325; Commonwealth v Ford (1986) 65 ALR 323 at 328; Freeman v Secretary, Department of Social Security (1988) 19 FCR 342.

Once it is understood that, in exercising his powers under s 186, the Commissioner would have been free to exercise a discretion under s 177F of the Income Tax Assessment Act, it follows that, in reviewing the Commissioner's decision under s 186, the Tribunal is free to exercise that same discretion if, upon the material then before it, it seems proper to take that course." (pages 452-453)

1. The Court went on to acknowledge that ss. 177F(3)-(8) provides a regime whereupon the Commissioner may make compensating adjustments with respect to any taxpayer. Those compensating adjustments may be made to the assessments of taxpayers whose affairs are not under consideration by the Tribunal. In that case, the Tribunal could not make the necessary adjustments and they would be left to the Commissioner to pursue. The Tribunal would be limited to making compensating adjustments in relation to the taxpayers' assessments it was considering but there would be no other limitation upon its exercising the discretion under s. 177F(1) of the ITA Act.

1. The approach adopted in Fletcher v Commissioner of Taxation was explained by Jenkinson J in Stevenson v Commissioner of Taxation. For reasons that were not relevant, the Tribunal had found that Mr Stevenson had greater amounts of taxable income, and so was liable to pay greater amounts of tax, than had been assessed by the Commissioner in respect of the relevant years of income. On behalf of Mr Stevenson, it had been submitted that the Tribunal was limited to affirming the Commissioner's assessments and could not give effect to its conclusions. Jenkinson J agreed with the submissions made by both parties that the Tribunal did not have power to amend an assessment under s. 170(1) and relied on the provisions of ss. 200B and 170(7) of the ITA Act. The Commissioner had submitted, however, that the Tribunal had not only the power but the duty to give effect to its own conclusions as to the taxable income that should have been assessed. It would then be for the Commissioner to give effect to that decision and it could do so under s. 170(7). 

1. After setting out a lengthy passage from the judgement in Fletcher v Commissioner of Taxation, Jenkinson J said that the Court's reasoning was equally applicable to the case before him.  He then went on to conclude:

"In my opinion the reasoning of the Full Court in Fletcher's case strongly supports, if it does not require, the conclusion I reach that the Tribunal did not lack power to give effect to its conclusion that the taxable income of the applicant, and so the tax due, in respect of the year of income ended 30 June 1981 were amounts greater than the respective amounts specified in the amended assessment, objection against which had been wholly disallowed by the respondent. The means available to the Tribunal to give effect to that conclusion were, in my opinion to make decisions, first, that the respondent's decision under review be varied by adding thereto a decision that the taxable income of the applicant and the tax payable thereon in respect of the year of income were respectively the amounts determined by the Tribunal and, secondly, that the matter be remitted to the respondent with a direction that he further amend the assessment accordingly. Such decisions could in my opinion involve no contravention of the letter or the spirit of any provision of s 170. Contravention of the letter of s 170 is not possible, because no command is addressed to the Tribunal, or authority conferred on the Tribunal, by any provision of that section: the Tribunal does not, and cannot, amend an assessment. Contravention of the spirit of the section is not effected by such decisions because s 170(7) manifests a clear legislative intention that the time which elapses between a decision by the Commissioner on an objection against an assessment and the amendment of that assessment 'in order to give effect to the decision upon any review' is not to be included in the measurement of the periods ordained by other provisions to that section." (page 299)

1. It seems to us that each of these cases (Comcare v Burton, Fletcher v Commissioner of Taxation and Stevenson v Commissioner of Taxation) is applying the principles encapsulated in the following passage from the reasons for decision of Davies J as President of the Tribunal in Re Control Investment Pty Ltd and Australian Broadcasting Commission (No. 2):

"Mr Morris submitted that the word 'may' in s 43 of the Administrative Appeals Tribunal Act imports an element of discretion so as to authorize the Tribunal to limit its function as it sees fit. But the provision 'For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision …' is not concerned to confer upon the Tribunal authority to limit its function but rather to confer upon it an amplitude of powers so that the Tribunal may exercise, if it is convenient and useful to do so, not only the decision-making power upon which the decision-maker relied, but all relevant powers and discretions which were conferred by the enactment upon the decision-maker. The provision extends the authority of the Tribunal so that it may more adequately exercise its function of reviewing on the merits the subject decision." (page 92)

1. The case of Secretary, Department of Social Security v Riley is another example of that same approach. The decision before the Tribunal was whether the amount of compensation sought to be recovered by the Secretary should be reduced because of special circumstances within the meaning of s. 115E of the Social Security Act 1991. At all times, Mr Riley was in receipt of a sickness benefit and his entitlement to it had not been questioned at any time before it came to the Tribunal. In its decision, the Tribunal set aside the decision under review and remitted the matter to the Secretary with a direction to consider whether or not there was any material to warrant a finding that Mr Riley ever qualified to receive sickness benefits and, if so, the amount of that benefit. In separate judgements on appeal, each of the Judges held that the decision to pay sickness benefit could not be reviewed under the guise of exercising a discretion under s. 115E.

1. Subject to any statutory qualifications to the contrary, the principles adopted in each case require that the Tribunal first identify the decision under review. It must then satisfy itself that it has jurisdiction to review that decision. It will do so by having regard to the scheme of the legislation and remembering that no provision of the AAT Act gives it jurisdiction to review a decision. Having done that, the Tribunal must then identify the powers and discretions that rested in the decision-maker when that decision was made. They may be found in the provision under which the decision was made or they may be found in other provisions of the statutory framework of which that particular provision is a part. Those are the powers and discretions that then rest in the Tribunal by virtue of s. 43(1) of the AAT Act. There is no requirement that those powers and discretions must lead to a decision that would itself be reviewable by the Tribunal had it been made by the decision-maker in the first instance and an application for review lodged in the Tribunal.

1. Applying these principles to the case we must consider the decision that is under review. That is the decision in relation to Mr Donald to make a banning order under s. 829 of the Law for a specified period. The Tribunal has jurisdiction to review that decision by virtue of s. 1317B of the Law. What powers and discretions did the Commission have in making that decision? The first is implicit in s. 829 itself.  In providing that the Commission "… may make a banning order…" (emphasis added), s. 829 is giving the Commission a discretion to decide whether or not to do so. Its discretion is not exercised in a vacuum, though. In the first instance, it is only able to exercise its discretion if one or more of the circumstances set out in s. 829 is established. In the second, it must decide whether or not to make a banning order permanently or, unless a person becomes incapable of managing his or her own affairs through mental or physical incapacity or the Commission has reason to believe that he or she is not of good fame and character, whether to make it for a specified period. In the third, it must decide whether to impose a banning order with or without conditions to permit a person to do things that he or she would otherwise not be permitted to do. All of these qualifications upon the Commission's discretion are found in Division 5 of Part 7.3 of the Law. They are equally applicable to the exercise of the Tribunal's discretion in reviewing the Commission's banning order.

1. The Commission's powers and discretions are found not only in the Law but also in the Act. Those found in Part 3 of the Act, and which we have set out above, are directed to assisting the Commission to carry out its functions and powers. That is inherent in the nature of the powers and discretions themselves for they are directed to investigating and gathering information relevant to the proper administration of various aspects of the regulatory framework set out in the national scheme law, or parts of it. Some of those aspects are confined to the Act, the Corporations Act 1989 and the Corporations Law of the Capital Territory. Others extend to include the law of another jurisdiction that corresponds to any of these. Regardless of their application, s. 93(2) makes it clear that the functions and powers set out in Part 3 are in addition to any other function or power conferred by a law of the Commonwealth or of this or any other jurisdiction. They are, therefore, functions or powers that would have been available to the Commission at the time that it was considering whether or not to make a banning order against Mr Donald. As s. 93AA falls within Part 3 of the Act, the Commission would have had the power to accept a written undertaking given by Mr Donald in connection with the banning order i.e. a matter in relation to which the Commission had a function or power.

1. As s. 43(1) of the AAT Act provides that the Tribunal may exercise all of the Commission's powers and discretions for the purposes of reviewing a decision, it follows that it may exercise the Commission's powers under s. 93AA of the Act. There is no question that, had the Commission decided to accept, or to refuse to accept, such an undertaking, the Tribunal would not have had power to review that decision (see paragraph 17 above). On the principles established in the cases to which we have referred that, however, does not detract from the Tribunal's ability to exercise the Commission's powers in considering its decision to make a banning order.

1. We will not set out the findings we have already made in our previous reasons.  As we said in those reasons, in our view, it seems to us that Mr Donald needs further time to reflect upon his actions so that he gains a proper understanding of what is appropriate behaviour of a dealers representative.  But in what circumstances is he to reflect?  In considering that question, we are mindful that we must have as our objects only those of achieving public protection and the maintenance of proper professional standards.  Although any decision may involve great deprivation for Mr Donald, the object of the order is not to punish or to extract retribution.  The protection of the public requires that persons operating in the market as dealers representatives understand that their behaviour must be such that it protects the integrity of the market.

1. As we said in our earlier reasons, a stay of the Commission's banning order was granted.  Mr Waller submitted that Mr Donald's conduct during the period of the stay is not a relevant matter in determining whether a banning order should be made.  In support, he submitted that transgressions of the kind engaged in by Mr Donald are notoriously difficult to detect and prosecute.  The Commission has not been in a position to monitor Mr Donald's conduct during the period of the stay.  There is no evidence that either Mr Donald or his employer has been monitoring him or that either or both of them would have informed the Commission or the Tribunal had it detected any improper conduct by him.  Further, Mr Waller submitted, there should be no comparison between Mr Donald's situation and that of Mr Casey.  Mr Donald was the initiator of the conduct, whereas Mr Casey was not, and, unlike Mr Casey, Mr Donald has failed to appreciate that what he did was wrong.  While Mr Donald should be encouraged to undertake studies in law and ethics, the public should not be put at risk.  On behalf of the Commission, Mr Waller submitted that the Tribunal should affirm the decision under review i.e. to make a banning order for four years.  Mr Donald would be at liberty to apply to the Commission pursuant to s. 832 to vary the order if circumstances warranted.

1. In the period in which Mr Donald has been permitted to return to work as a dealers representative, he obtained a position with BNP.  On the basis of his evidence, which is not contradicted by the Commission, we find that BNP has full knowledge of the history of this matter.  On the same basis, we find that Mr Donald has been engaged mainly in marketing and research.  There is no evidence that Mr Donald's behaviour has been anything other than appropriate in the two months he had been with that firm at the time of the initial hearing.  Certainly, there is no evidence that either Mr Donald or BNP has been monitoring his conduct but, equally, there is no evidence that they have not. 

1. To impose a further banning order when a banning order has been stayed and there is no evidence of further inappropriate behaviour in the short period of Mr Donald's resuming work as a dealers representative almost smacks of punitive action rather than of protection of the public.  Considerations of punishment are as inappropriate as are considerations of the hardship that has been caused to Mr Donald by his inability to work as a dealers representative. 

1. We have considered the effect that the making of the banning order has had to date.  It is not usual that we are in a position to assess its effectiveness part way through its period of imposition.  We find that, despite its having been in place for some sixteen months or so, Mr Donald has continued to have an imperfect understanding of the inappropriateness of his behaviour on 29 May, 1998.  Were we to accede to the Commission's submission to continue the banning order for another two years and eight months, there is no reason to believe that Mr Donald would gain a perfect understanding simply through the passage of a greater length of time.  He would be encouraged to undertake studies in law and ethics but no guidance is to be given for the direction of those studies.  In the circumstances of this case, we do not consider that the public would be adequately protected in the long term by taking this course.  It would be protected only in the short term while he is banned. 

1. It seems to us that the public is better protected both in the short and the long term if a more pro-active approach is taken to Mr Donald's rehabilitation.  It seems to us that Mr Donald should be permitted, having served the period of the banning order to 22 November, 2000, to resume his duties as a dealers representative under supervision while undergoing a programme of education.  That programme would be directed to extending his knowledge of what is appropriate legal and ethical behaviour generally in the industry and specifically as a dealers representative.  Both actions would achieve some level of protection to the public.  In addition to any supervision provided by BNP, any dealings would be monitored by the Australian Stock Exchange as part of its scheme of monitoring.  Each day it examines the day's trading and identifies discrepancies in trading of the sort identified in this case. 

1. It seems to us that both supervision and education need to be reinforced by accepting an undertaking from Mr Donald under s. 93AA of the Act. An undertaking carries with it certain consequences that underline to Mr Donald the need to comply with its terms. In so doing, it protects the public by ensuring, and not merely encouraging, Mr Donald to undertake further education. It also enables the Court to order that Mr Donald pay the Commonwealth an amount up to the amount of any financial benefit that he may obtain directly or indirectly and that is reasonably attributable to a breach of the undertaking or to direct that he compensate any other person who has suffered loss or damage as a result of that breach (s. 93AA(4)). Finally, it shows to other dealers representatives and the remainder of the participants in the securities and investments industry that breaches carry significant and public consequences.

1. We set out in our previous reasons an outline of an undertaking that might be appropriate.  The Commission did not offer any suggestions as to its terms.  Through a letter from 18 June, 2000 from his solicitors, Mr Donald offered to enter an enforceable undertaking which includes requirements that he:

"1.       … [enrol in and complete] the Business and Finance Practice Industry and/or the Financial Markets Law, Regulation and Compliance courses offered by the Securities Institute.  …

2.… co-operate with ASX and ASIC in the preparation and presentation of seminars which will consider issues of law, practice and procedure relevant to acting as a Designated Trading Representative.

3.… undertake for a period of three and a half years from the date of the undertaking not to create, or do anything that is likely to create, a false or misleading appearance of active trading in any securities on a stock market or a false or misleading appearance with respect to the market for, or the price of any securities.

4.… will, during the term of the undertaking, give a copy of the undertaking to all licensed dealers by whom he is employed."

1. Mr Donald also indicated that he was prepared to consider any additional reasonable terms that the Commission may wish to include.  It did not indicate any such terms.  In the absence of any other suggestions and given that it is directed to protecting the public by educating Mr Donald, directing his attention to his previous inappropriate behaviour and by doing so in a context in which there are sanctions for its breach, we consider that the undertaking proposed by Mr Donald is satisfactory and that it should be accepted.

1. Before leaving this matter, we should note that we agree with Mr Waller that the situation of Mr Donald and Mr Casey are very different.  Mr Casey readily understood and acknowledged that he had been in error.  He said that he was "professionally ashamed" of what had happened.  No doubt the Commission took that into account in deciding to accept Mr Casey's enforceable undertaking and in not making a banning order.  To decide that an enforceable undertaking should also be accepted from Mr Donald is not to equate their behaviour or their positions at all.  Mr Donald has already served a significant period under a banning order.  Had he not done so, our decision could have been different.

1. There was some discussion about whether we could accept the undertaking. It seems to us that there is a distinction between s. 93AA of the Act and ss. 170 and 200B of the ITA Act. Section 170(1) of the ITA Act provides that the Commissioner may, subject to the remaining provisions of the section, at any time amend any assessment. He may do so by making alterations or additions as he thinks necessary and notwithstanding that the tax might have been paid in respect of the assessment. Time limits are imposed upon the Commissioner in effecting an amendment. At the time that Jenkinson J delivered his judgement in Stevenson v Commissioner of Taxation, s. 200B(1) provided that, when a decision of the Tribunal or of a court under Part VA became final, the Commissioner is required to amend the assessment if necessary to effect that decision. Together, ss. 170(1) and 200B make it clear that the Tribunal cannot amend an assessment. There are no equivalent provisions in the Act and, in particular, no direction to the Commission to implement the decisions of the Tribunal. For all practical purposes, the decision of the Tribunal is substituted for the decision of the Commission. For all practical purposes, there is no difference between the Tribunal's deciding that the Commission should accept an undertaking under s. 93AA and the Tribunal's deciding that it has the power conferred on Comcare by s. 57 of the SRC Act to require a person to attend a medical examination. Deputy President Todd found that such a decision came within the Tribunal's "amplitude of powers" as described by Davies J (Re Health Insurance Commission and Hobbes and Comcare (1990) 21 ALD 229). As Senior Member Bayne said in Re De Marco and Comcare (1996) 43 ALD 654, "Where the tribunal makes such a decision it is … to be taken as a decision of the relevant authority; see s 43(6)." (page 658).

1. For the reasons we have given, we:

1.set aside the decision of the respondent dated 20 July, 1999; and

2.substitute a decision that:

(1)a banning order be made prohibiting the applicant from doing any act as a dealers representative from 20 July, 1999 until 22 November, 2000; and

(2)the Commission accept a written undertaking from the applicant to the effect that the applicant:

(a)enrol in and complete the Business and Finance Practice Industry and/or the Financial Markets Law, Regulation and Compliance courses offered by the Securities Institute;

(b)co-operate with Australian Securities Exchange and the respondent in the preparation and presentation of seminars which will consider issues of law, practice and procedure relevant to acting as a Designated Trading Representative;

(c)undertake for a period of three and a half years from the date of the undertaking not to create, or do anything that is likely to create, a false or misleading appearance of active trading in any securities on a stock market or a false or misleading appearance with respect to the market for, or the price of, any securities; and

(d)during the term of the undertaking, give a copy of the undertaking to all licensed dealers by whom he is employed.

1. Had Mr Donald not been prepared to enter an enforceable undertaking, we indicated in our earlier reasons that we would have made a decision to the effect that Mr Donald complete the remainder of the four year banning order as originally made by the Commission.  We did not indicate the decision we would make if we considered that we did not have power to accept an enforceable undertaking.  At the hearing, we indicated that, if we do not have that power, we would set aside the Commission's decision and substitute a decision that a banning order be made against Mr Donald for a period of two years with effect from 20 July, 1999 and excluding the period during which the banning order was stayed. 

1. We do not pretend to suggest that the protection of the public would be as great as would be provided by the decision we have made, but we do consider that it would achieve the protection of the public to a sufficient degree.  We consider, though, that a banning period of some length would be warranted.  The conduct in which Mr Donald engaged was serious and conduct from which the public needs to be protected.  His being banned certainly protects the public in that he cannot engage in the behaviour at all.  At the same time, it gives him time to reflect on what is and what is not appropriate conduct.  On the basis that he gains a better understanding of those concepts, as he appeared to do in his later answers at the hearing, that would also lead to the greater protection of the public in the long term.  The four year period would achieve the first type of public protection for a longer period by effecting his removal but we are not satisfied that it would achieve the second any better than two years.  The public protection must also be considered in the context of his now being employed by a firm that is aware of his history as is the rest of the industry.  He has been publicly shamed and it is to be expected that his work will be more closely supervised than would otherwise be the case even when the period of the banning order is concluded.  In light of all of these factors, we consider that a two year banning period would be warranted to achieve the protection of the public.

I certify that the sixty five preceding paragraphs are a true copy of the reasons for the decision herein of  Miss S A Forgie (Deputy President), Mr D Elsum and Mr W G McLean (Members)

Signed:          .....................................….     

A R Horne      Associate

Dates of Hearing  5, 6, 7 February, 2001 and 21 June, 2001
Date of Decision       2 July, 2001
Counsel for the Applicant                 Mr Moshinski QC and Mr Murley
Solicitor for the Applicant                Ms R Murley
Counsel for the Respondent             Mr Waller

Solicitor for the Respondent    Australian Securities and Investments Commission