Re Mclean and Australian Securities and Investments Commission
[2016] AATA 22
•22 January 2016
Mclean and Australian Securities and Investments Commission [2016] AATA 22 (22 January 2016)
Division
TAXATION & COMMERCIAL DIVISION
File Number(s)
2015/5344
Re
Philip Mclean
APPLICANT
And
Australian Securities and Investments Commission
RESPONDENT
DECISION
Tribunal Prof R Deutsch, Deputy President
Date 22 January 2016 Place Sydney The application for a stay in respect of the Banning Order which would ban the Applicant from providing financial services for a period of three years is granted. The operation and implementation of the Banning Order is stayed until the parties have had the opportunity to make submissions after the Tribunal has heard and determined the applications for review.
The application for Suppression Orders is refused.
...................................[sgd].....................................
Prof R Deutsch, Deputy President
CATCHWORDS
PRACTICE AND PROCEDURE – application for stay of decision – decision to impose banning order – relevant principles – prospects of success - consequences for Applicant – consequences for Respondent in carrying out its functions – application granted
PRACTICE AND PROCEDURE – confidentiality orders – suppression orders – proceedings generally held in public – open administration of justice – request for suppression orders refused
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) ss 35, 41(2)
CASES
Australian Securities and Investments Commission (ASIC) v Administrative Appeals Tribunal (2009) 181 FCR 130
Commonwealth of Australia and Quirke (1986) 9 ALD 92 at 95
Dart and Director-General of Social Services (1982) 4 ALD 553
Pochi v Minister for Immigration and Ethnic Affairs (1979)2 ALD 33
Repatriation Commission and Delkou (1985) 8 ALD 454 at 32
Scott and Australian Securities Commission [2009] AATA 798YFFM and Australian Securities and Investments Commission [2009] AATA 409
REASONS FOR DECISION
Prof R Deutsch, Deputy President
22 January 2016
INTRODUCTION
In this application the Applicant is seeking:
(a)an order (the Stay Order) pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act) to stay an order (the Banning Order) made by a delegate of the Respondent pursuant to s 920A and 920B of the Corporations Act 2001 (Cth) (the Act) to ban the Applicant from providing financial services for a period of three years; and
(b)an order (the Suppression Order) pursuant to s 35 of the AAT Act:
·for the non-disclosure by the Respondent and any other person or entity, of any document, evidence or other matter before the Tribunal that identifies or may tend to identify the Applicant, the Banning Order and the conduct the Respondent complains of; and
·for the non-publication, by the Respondent and the Tribunal, of the Applicant’s name and details.
The Respondent opposes the application in respect of both orders sought.
THE STAY ORDER
General
The Tribunal’s power to make orders affecting the operation of the decision under review is to be found in s 41 (2) of the AAT Act which provides as follows:
The Tribunal may, on request being made, as prescribed, by a party to a proceeding before the Tribunal (in this section referred to as the relevant proceeding), if the Tribunal is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make such order or orders staying or otherwise affecting the operation or implementation of the decision to which the relevant proceeding relates or a part that decision as the Tribunal considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review.
Paying particularly close attention to the final two lines of that section it is clear that the overall assessment needs to be made in the context of securing “the effectiveness of the hearing and determination of the application for review”.
In making that assessment, President Downes J in Re Scott and Australian Securities Commission [2009] AATA 798 at [4] set out a non-exhaustive list of factors to be taken into account when determining an application for a stay order as follows:
(a)the prospects of success;
(b)the public interest;
(c)the consequences for the Applicant if the order is not granted;
(d)the consequences for the Respondent in carrying out its functions;
(e)whether the application for review would be rendered nugatory if the Stay was not granted; and
(f)any other relevant matters.
Paragraph (d) above might include a consideration as to whether there are any conditions which could be imposed to ameliorate any consequences of either granting or refusing the Stay.
Paragraph (e) above might incorporate a consideration of the length of time the ban has already been in place and the time to the full hearing of the substantive matter.
Prospects of Success
Arguments relating to prospects of success are fraught with danger in circumstances where little or no evidence has been provided in relation to the matters in dispute. Clearly, in considering prospects of success in a review application for the purposes of an interlocutory application, it is not the role of this Tribunal to conduct a preliminary hearing of the review application: Re Dart and Director-General of Social Services (1982) 4 ALD 553 at 555; Re Repatriation Commission and Delkou (1985) 8 ALD 454 at 32.
It is relevant, however for the Tribunal to consider whether there are:
(a)facts or circumstances which, if established in the substantive hearing, would provide a basis for success in the review application; or
(b)points of law raised, which, if sustained, would lead to that conclusion.
(Re Commonwealth of Australia and Quirke (1986) 9 ALD 92 at 95; Re YFFM and Australian Securities and Investments Commission [2009] AATA 409 at 9)
In this case the Applicant has raised a number of facts and circumstances which may be relevant to the review application. Without going into these in detail the key issues raised are as follows:
(a)the exact nature of the trades involved and whether such trades were pre-arranged with the intent of deliberately setting out to create an artificial price for trading;
(b)whether the activities comprised acts that had or were likely to have the effect of causing the creation of a false or misleading appearance of active trading;
(c)the relevance, if any, of the fact that the Applicant had no prior training or experience in trading and was provided with none by his employer at the relevant time; and
(d) the relevance, if any, of the fact that the Applicant was receiving direct and clear instructions from a third party as to how to conduct the trading and market making in question.
Some argument was put to the Tribunal during the interlocutory hearing regarding the strength of the Applicant’s arguments in relation to these matters.
As indicated above it is not the job of this Tribunal at this stage to conduct a hearing in relation to these matters but having heard from both sides, it is my considered view that none of these arguments are in any way spurious or frivolous and further that they raise important questions as to the specific facts in question and their relevance at law.
Without in any way seeking to pre-judge the matter, it seems to this Tribunal that the Applicant has some reasonable prospects of success at a full hearing.
Public Interest
The Banning Order is clearly intended to protect the public interest by protecting members of the investing public from abuse which would be occasioned by similar conduct being undertaken by the Applicant to that which has led to the Banning Order in the first place.
In other words the key issue here would appear to be if a stay were granted, is there any real likelihood that the Applicant would use the benefit of that stay so as to inflict on the public, the very same conduct which led to the Banning Order being sought in the first place.
In the view of this Tribunal, the risk of harm to the public in the manner suggested is very low. There are three factors in particular which support that conclusion.
First, the Applicant has provided to the Tribunal a sworn and witnessed statement undertaking not to be involved “in any way” in trading and/or market making in the financial services industry until the outcome of the review. The terms of the undertaking could not be expressed more widely.
Secondly, the alleged conduct occurred more than two years ago over two separate periods, the first spanning some 10 days and the second one day. It appears to be the unchallenged position that since that time the Applicant has not been engaged in such activities.
Thirdly, the Applicant does not currently occupy a position involving trading and/or market making but rather is involved in the promotion of Exchange Traded Funds to financial planners and brokers.
In such circumstances it seems unlikely to this Tribunal that a breach of his undertaking is a genuine concern. The Applicant would well understand the seriousness of such a breach and the consequences which would flow if that were to occur and the Respondent is well placed to monitor and ensure compliance with the Applicant’s undertaking.
Consequences for the Applicant if the Stay is not granted
There would appear to be little doubt that the Banning Order has caused and will continue to cause significant hardship to the Applicant as indeed it would to most if not all persons who were the subject of such an order.
In and of itself that is hardly ever a sufficient basis for securing a stay but in this case it is relevant when considered in the context of the other matters raised. Here the Applicant by all accounts is qualified in, has trained in and has experience in only the securities industry and is unlikely to secure worthwhile remunerative work outside that industry. He is in a difficult financial position and he is unlikely to be in a position to pursue an independent review of the matter if a stay is not granted.
The consequences for the Respondent in carrying out its functions
As mentioned previously this might include any conditions which could be imposed and which would ameliorate any consequences of either granting or refusing the Stay.
The Applicant’s unqualified undertaking is of considerable importance in this regard and that has already been canvassed above.
The critical issue here is the Respondent’s role in protecting the public. At its core, the purpose of a banning order of this nature is to ensure that the Respondent takes all necessary steps to stop someone who has caused damage through his or her activities from continuing to do so to the potential detriment of others.
In this case the risks of that occurring are in the Tribunal’s view low and are outweighed by the hardship issues confronting the Applicant in pursuing a review of this matter.
Whether the application for review would be rendered nugatory if the Stay was not granted
As already indicated refusing a stay would effectively deprive the Applicant of the opportunity to pursue the review in circumstances where there are some reasonable grounds to believe that he might succeed upon a review being undertaken.
Any other relevant matters
All the relevant matters appear to have been raised above.
Concluding remarks on Stay
The Tribunal is of the view that the factors generally weigh in favour of the grant of a stay.
THE SUPRESSION ORDER
The provisions of s 35 of the AAT Act give effect to the basic principle that proceedings before the Tribunal are to be open and documents and other material lodged with the Tribunal in the course of a proceeding should also be available to the public. Thus, the starting point in any analysis is that the hearing of a proceeding before the Tribunal is to be in public and any documents and material lodged with the tribunal in the course of the proceeding are also to be available to the public.
Having said that s 35 enables the Tribunal, where satisfied that it is desirable to do so by reason of the confidential nature of any evidence or matter or for any other reason, to order the hearing or part thereof take place in private (s 35(2)) and to give directions restricting the publication of the names of witnesses or evidence which is given before the Tribunal (s 35(3)).
Section 35 (5) provides as follows:
In considering whether to give directions under section (2), (3), or (4), the Tribunal is to take as the basis of its consideration the principle that it is desirable:
(a) that hearings of proceedings before the Tribunal should be held in public; and
(b) that evidence given before the Tribunal and the contents of documents received in evidence by the Tribunal should be made available to the public and to all the parties; and
(c) that the contents of documents lodged with the Tribunal should be made available to all the parties.
However (and without being required to seek the views of the parties), the Tribunal is to pay due regard to any reasons in favour of giving such a direction, including, for the purposes of subsection (3) or (4), the confidential nature (if applicable) of the information.
The relevance of these provisions have been considered in detail in a number of decisions most significantly by the Full Federal Court in Australian Securities and Investments Commission (ASIC) v Administrative Appeals Tribunal (2009) 181 FCR 130 where a number of key points are made as follows at [74] – [76]:
·the norm is that proceedings before the Tribunal shall be in public and this norm is reinforced by the requirements of s35(3) which expressly confirmed the principle that it is desirable that hearings be held in public;
·the power to depart from that norm as conferred by s35(2) and is one that is to be exercised sparingly: Re Pochi v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 33 at 55–6;
·the reason matters are not kept secret is the overriding importance of justice being administered openly and in public. This applies equally to persons who are in business even when, for example, employees may be disadvantaged; and
·the Tribunal would need some cogent reason by reference to the particular case to depart from the ordinary requirement of a public hearing. It is difficult to accept that harm, even serious harm, to the recipient’s reputation resulting from public awareness of a banning order would be a sufficiently cogent reason.
The Applicant has not offered any specific cogent reason as to why this case warrants a variation to the norm referred to above. The fact that harm will result for the Applicant is not a sufficient basis for making a suppression order of the kind sought.
DECISION
The application for a stay in respect of the Banning Order is granted. The operation and implementation of the Banning Order is stayed until the parties have had the opportunity to make submissions after the Tribunal has heard and determined the applications for review.
The application for the Suppression Orders is refused.
I certify that the preceding 36 (thirty-six) paragraphs are a true copy of the reasons for the decision herein of Prof R Deutsch, Deputy President ............................[sgd]............................................
Associate
Dated 22 January 2016
Date(s) of hearing 12 November 2015 Date final submissions received 19 November 2015 Counsel for the Applicant Mr W.G Muddle, SC Solicitors for the Applicant Gillis Delaney Lawyers Counsel for the Respondent Ms Mitchelmore Solicitors for the Respondent Australian Securities & Investments Commission
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