Re Quinlivan and Australian Securities and Investments Commission

[2008] AATA 1094

Administrative Appeals Tribunal

ORDER AND REASONS FOR ORDER [2008] AATA 1094

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/5609

GENERAL ADMINISTRATIVE DIVISION		)
Re		DUDLEY QUINLIVAN

Applicant

And AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Respondent

ORDER

Tribunal The Hon Dr B H McPherson, Deputy President, and Senior Member Bernard J McCabe

Date8 December 2008

PlaceBrisbane

Decision

The Tribunal directs, pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975:

1.     The Tribunal’s interim stay order dated 27 November 2008 is set aside.

2. Subject to (4), the operation and implementation of the decision of a delegate of the Australian Securities and Investments Commission dated 21 November 2008 to disqualify the applicant from management of a company pursuant to s 206F of the Corporations Act 2001 is stayed until the final determination of the matter at the hearing, or until further order, for the reasons given orally at the hearing on 4 December 2008;

3.     No order is made restraining the respondent from publicising its decision of 21 November 2008 and the fact of these proceedings (including the stay);

4.     The order staying the operation and implementation of the decision referred to in (2) shall take effect upon the applicant providing a written undertaking to engage Victor Peter Green, a chartered accountant, of 31-33 Price Street, Nerang on the following basis:

(a)   Mr Quinlivan will meet weekly with Mr Green at a time specified by Mr Green to discuss the management of the companies of which Mr Quinlivan is a director and all management decisions made by him in that regard;

(b)   Mr Green, his servants and agents shall have full, free and complete access to employees of the companies and to all books and records of the aforesaid companies and facilitate the answering of any questions Mr Green may have absent the records or the staff;

(c)   Mr Green shall be instructed to report to the respondent any apparent contravention of the Corporations Act 2001 or the Australian Securities and Investments Commission Act 2001 of which he becomes aware; and

(d)   Mr Quinlivan shall promptly pay Mr Green his proper remuneration for performing tasks required of him under this arrangement.

..............................................

Senior Member

Administrative Appeals Tribunal Act 1975 (Cth), s 41(2)

Australian Securities and Investments Commission Act 2001 (Cth), ss 1(2)(f), 11(4)

Corporations Act 2001 (Cth), ss 206F, 533

Duncan v Companies Auditors Liquidators Disciplinary Board [2006] FCA 1747

PTLZ and Australian Securities and Investments Commission [2008] AATA 106

Australian Securities and Investments Commission v PTLZ [2008] FCAFC 164

Cape York Airlines P/L and Civil Aviation Safety Authority [2004] AATA 682

REASONS FOR ORDER

8 December 2008 The Hon Dr B H McPherson, Deputy President, and Senior Member Bernard J McCabe          

1. Dudley Quinlivan, the applicant, is a company director. The Australian Securities and Investments Commission (“ASIC”) decided to disqualify Mr Quinlivan from managing a corporation for three years pursuant to s 206F of the Corporations Act 2001. Mr Quinlivan asked the Tribunal to stay that decision pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975 (“the AAT Act”). He has also asked the Tribunal to prevent ASIC from publishing or otherwise discussing its decision. In effect, the applicant wants news of ASIC’s decision suppressed until the dispute can be resolved at a hearing.

2.      We indicated at the hearing of the stay application on 4 December 2008 that, subject to being provided with information about the progress of a number of property development projects being conducted by companies in the so called “Quinlivan group”, we were satisfied that an order should be made staying the operation and implementation of the decision to disqualify the applicant until the determination of the review at the hearing or until further order. We gave reasons for that decision at the hearing. We were subsequently provided with the information we sought detailing the state of the various developments. The information was presented in the form of two affidavits. That information confirms our preliminary view at the hearing on 4 December 2008 that it was appropriate to grant a stay. We formally make that order today subject to a requirement that the applicant appoint an accountant to monitor the finances of his companies and his conduct as a manager during the currency of the stay.

3. The balance of these reasons considers whether the Tribunal’s power under s 41(2) to make an order affecting the operation or implementation of a decision extends to making a non-publication order of the kind sought by the applicant.

Background to the dispute

4. Mr Quinlivan has been involved in the management of a number of companies that became insolvent. Those companies were wound up leaving debts in the amount of $40 million. None of the unsecured creditors was paid a dividend. The liquidator lodged an adverse report pursuant to s 533 of the Corporations Act 2001. ASIC formally notified the applicant of its concerns on 11 August 2008. A hearing was held on 7 November 2008. Following the hearing, a delegate decided that Mr Quinlivan should be disqualified under s 206F for a period of three years. The decision was made on 21 November 2008. Notice of the decision was served on the applicant on 26 November 2008.

5. The applicant commenced proceedings in the Tribunal. He sought orders under s 41(2) of the AAT Act. An interim order was made directing that the operation and implementation of the decision under review be stayed. That interim order is set aside now that the Tribunal has had the opportunity to hear the parties in relation to the scope of a stay order that will presumably remain in place until the dispute is resolved following a final hearing.

The power to make a stay order

6. The Tribunal’s power to make an order staying the operation or implementation of a decision is set out in s 41(2) of the AAT Act. The sub-section provides:

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 of that decision as the Tribunal considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review.

7.      A stay order does not set aside the original decision. That decision remains in place. As Emmett J explained in Duncan v Companies Auditors Liquidators Disciplinary Board [2006] FCA 1747 at [11], the stay order is directed to the operation or implementation of the decision under review.

8. There is no question we have the power to direct that the implementation and operation of the decision to disqualify Mr Quinlivan can be stayed pursuant to s 41(2). Once that order is made, the applicant is free to continue acting as a director subject to the terms of the stay order. There is also no doubt following the decision in Duncan that the stay power permits us to direct that ASIC refrain from completing the other formal steps required under the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001 (the “ASIC Act”) following a disqualification order. Those steps include noting the fact of the order on the register maintained under the Act. The question in this case is whether our power permits us to restrain ASIC from issuing press releases and otherwise publicising or discussing the original decision.

9.      ASIC says we do not have the power, and that we should not exercise it if we do. Mr Derrington SC, for ASIC, pointed out that Duncan did not directly address the power to make an order in the terms sought. His Honour’s reasons focus on the power to make an order restraining the regulator from issuing the formal notifications required under the statute. Mr Savage SC, for the applicant, says the orders in Duncan – especially order (5) - can only make sense if his Honour at least implicitly accepted the power under s 41(2) permitted the Tribunal to restrain the regulator from publicising the decision more generally.

10.     We acknowledge that the wording of the orders in Duncan creates a degree of ambiguity about his Honour’s intentions, but we are satisfied the reasoning does not directly address the issue before us.

11.     We were also referred to the decision of Deputy President Forgie in PTLZ and Australian Securities and Investments Commission [2008] AATA 106. ASIC decided to ban the applicant from providing financial services. The applicant sought a stay pursuant to s 41(2). He also sought an order restraining ASIC from publicising the decision prior to the hearing. The application for a non-publication order was made under ss 35 and 41(2). DP Forgie considered the decision in Duncan and other authorities and concluded the Tribunal did have the power under s 41(2) to make the orders sought. She directed that the applicant be identified by a pseudonym and restrained ASIC from issuing press releases.

12. DP Forgie considered (at [81]ff) whether ASIC provided information to the public in fulfilment of a statutory duty. In the event, she decided that s 1(2)(f) of the ASIC Act was not the source of ASIC’s duty to issue press releases. She speculated that the source of the power might lie in s 11(4) of the ASIC Act although she did not decide the question because she held she did not need to do so. She explained (at [90]):

Provided the issue of the press release can be regarded as a step in, or part of, the implementation of decisions that the tribunal does have jurisdiction to review, the power given by s 41(2) can be used to affect it.

13.     We agree with this statement of the law but, with respect, we are inclined to reach a different conclusion. We do not accept that the issue of a press release or answering press queries can be said to be “a step in, or part of, the implementation of [a] decision”. It is not enough that the publicity relates to the decision under review, or that it is in a practical (but not a legal) sense brought on by the decision under review. It is not formally required under the legislation. The issue of a press release reporting the fact of the decision does not implement or effect the operation of the decision in any way. As the Tribunal explained in Cape York Airlines P/L and Civil Aviation Safety Authority [2004] AATA 682 at [16], the decision to publish:

…is properly characterised as being incidental or collateral to the stayed decision, rather than as an act occurring as part of the implementation of that earlier decision. Publication of the notice is not integrally and necessarily connected with the decision to cancel; if it were, an order might be made. The implementation of the decision in question involves taking steps to prevent the applicant from flying. Publishing notice of the decision on the website does not do that, even if it may have practical commercial implications for the applicant’s business.

14.     We acknowledge DP Forgie’s decision in PTLZ was affirmed on appeal to the Full Federal Court in Australian Securities and Investments Commission v PTLZ [2008] FCAFC 164. But the Full Court’s reasons focused on the decision to make an order under s 35(2) of the AAT Act. North and Downes JJ noted the Full Court had not considered “important questions relating to the jurisdiction of the Tribunal, particularly as to the extent of the orders and directions authorised by s 41”: at [60].

15. Even if we are wrong on this issue, we do not accept it would be appropriate to make the order sought in relation to publicity. The power in s 41(2) is to be exercised where appropriate for the purpose of securing the effectiveness of the hearing. We accept there is evidence suggesting that preventing the applicant from managing the companies in the Quinlivan group might do so much damage that the hearing becomes nugatory. But it is less clear to us that the consequences attaching to publicity will have that same effect. We have made it clear that the applicant would in any event be expected to disclose the fact of the disqualification decision and these proceedings to his financier and any investors, and perhaps even his employees so they could not afterwards complain that they were “kept in the dark” while making important decisions about their future dealings with the applicant. If he is required to disclose the facts to those individuals, it is unclear how much extra damage will be caused if the facts (including the facts about this appeal and any stay orders) are disclosed to the wider public.

Conclusion

16. We do not propose making an order that the respondent refrain from publicising the fact of its decision pursuant to s 41(2) of the AAT Act although we expect that any publicity generated by the respondent will include appropriate disclosure of the fact of these proceedings and the stay order.

I certify that the 16 preceding paragraphs are a true copy of the reasons for the order herein of The Hon Dr B H McPherson, Deputy President, and Senior Member Bernard J McCabe

Signed: .....................................................................................
  Michael Buckingham, Associate

Dates of Hearing  27 November 2008
  4 December 2008
  8 December 2008
Date of Order  8 December 2008
Counsel for the applicant          Mr D Savage SC
  Mr C Coulsen
Solicitor for the applicant          QBM Lawyers
Counsel for the respondent      Mr R Derrington SC
Solicitor for the respondent      Australian Securities and Investments
  Commission