Re Tweed and Australian Securities and Investment Commission
[2007] AATA 1226
•13 April 2007
CATCHWORDS – PRACTICE AND PROCEDURE – application for stay of operation and/or implementation of decision banning person from permanently providing any financial services – matters to be taken into account in considering stay – whether a stay order necessary to secure the effectiveness of the hearing and determination of the application for review – application refused.
Administrative Appeals Tribunal Act 1975 ss 37, 41(1) and 41(2)
Australian Securities and Investments Commission Act 2001 12CC(1) and 12CC(2)
Commonwealth Criminal Code s 7(1)(c) and 7(1)(d)
Corporations Act 2001 ss 761A, 766A , 766B, 766C, 766D, 766E, 911A, 911B, 911D, 912A, 913B, 914A, 915B, 915C, 915F, 920A, 920B, 920C, 920E, 1019E(2), 1019G(2), 1019I(4), 1041H and 1324
Migration Act 1958 s 501
Superannuation Industry (Supervision) Act 1993 ss 120A(2) and (3)
Aevum Limited v National Exchange Pty Ltd (2004) 142 FCR 316; 23 ACLC 287
Australian Securities & Investments Commission (ASIC) v National Exchange Pty Ltd [2005] FCAFC 226; (2005) 148 FCR 132
Australian Securities and Investments Commission v National Exchange Pty Ltd [2003] FCA 955; (2003) 202 ALR 24
National Exchange Pty Ltd v Australian Securities & Investments Commission [2004] FCAFC 90; (2004) 49 ACSR 369
Re Bishop and Secretary, Department of Social Security (1989) 18 ALD 661
Re Commonwealth of Australia and Quirke (1986) 9 ALD 92
Re Crossan and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 216
Re Edwards and Civil Aviation Safety Authority (2003) 74 ALD 572
Re Kurukkal and Minister for Immigration and Multicultural and Indigenous Affairs (2004) 38 AAR 482
Re Repatriation Commission and Delkou (1985) 8 ALD 454
Re VBJ and Australian Prudential Regulation Authority [2005] AATA 642; (2005) 87 ALD 747; (2005) 41 AAR 97
Rich v Australian Securities and Investments Commission (2004) 220 CLR 129
Shi v Migration Institute of Australia (2003) 134 FCR 326; 78 ALD 281
Yolbir v Administrative Appeals Tribunal (1994) 48 FCR 246; (1994) 33 ALD 8
DECISION AND REASONS FOR DECISION [2007] AATA 1226
ADMINISTRATIVE APPEALS TRIBUNAL )
) V2006/1131
GENERAL ADMINISTRATIVE DIVISION )
Re DAVID TWEED
Applicant
AndAUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Respondent
DECISION
Tribunal: Deputy President S A Forgie
Date: 13 April 2007
Place: Melbourne
Decision:The Tribunal refuses the applicant’s application that it make an order under s 41(2) of the Administrative Appeals Tribunal Act 1975 staying the operation or implementation of a decision made by the respondent on 30 October 2006.
S A FORGIE
Deputy President
REASONS FOR DECISION
The applicant, Mr David Tweed, applied for a stay of the operation of a decision of a delegate of the respondent, the Australian Securities and Investments Commission (ASIC). ASIC’s decision, which was dated 30 October 2006, was made under s 920A of the Corporations Act 2001 (Corporations Act) and was to prohibit Mr Tweed permanently from providing any financial services. I have decided that it is not appropriate to make a stay order.
LEGISLATIVE BACKGROUND
The Tribunal’s power to stay: s 41 of the Administrative Appeals Tribunal Act 1975
In general terms, s 41(1) of the Administrative Appeals Tribunal Act 1975 (“AAT Act”) provides that:
“Subject to this section, the making of an application to the Tribunal for a review of a decision does not affect the operation of the decision or prevent the taking of action to implement the decision.”
Section 41(2) then goes on to provide that:
“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.”
Broad outline of the disqualification provisions of the Corporations Act
Part 7.6 of the Corporations Act provides for the licensing of providers of financial services. A “financial service” is not defined as such. Rather, s 766A sets out the circumstances in which a person “provides a financial service”. Those circumstances occur if the person:
“(a) provide[s] financial product advice (see section 766B); or
(b)deal[s] in a financial product (see section 766C); or
(c)make[s] a market for a financial product (see section 766D); or
(d)operate[s] a registered scheme; or
(e)provide[s] a custodial or depository service (see section 766E); or
(f)engage[s] in conduct of a kind prescribed by regulations made for the purposes of this paragraph.”[1]
[1] s 766A(1)
Regulations may be made that expand the range of persons who are taken to provide a financial service by prescribing that regulations may set out circumstances in which those facilitating the provision of a financial service may also be taken to provide that service.[2] Regulations may also be made setting out the circumstances in which persons are taken to provide, or not provide, a financial service.[3] A person is not taken to provide a financial service if that person’s conduct is done in the course of work ordinarily done by clerks.[4]
[2] s 766A(2)(a)
[3] s 766A(2)(b)
[4] s 766A(3)
Part 7.1 develops the circumstances in which a person provides a financial service. Subject to s 911A, a person who carries on a “financial services business in this jurisdiction” must hold an Australian Financial Services Licence (AFSL) covering the provision of the financial services.[5] A “financial services business” is a business of providing financial services.[6] There are exemptions to the requirement to be licensed[7] and regulation of the circumstances in which a person may provide a financial service on behalf of another person who carries on a financial services business.[8] Those who are licensed to provide financial services must comply with the obligations set out in Division 3 of Part 7.6. The general obligations are set out in s 912A of the Corporations Act.
[5] s 911A(1) Section 911D prescribes when a financial services business is taken to be carried on in this jurisdiction.
[6] s 761A
[7] s 911A(2)-(6)
[8] s 911B
The manner in which a person applies for a licence is set out in s 913A of Division 4 of Part 7.6. Section 913B(1) provides that:
“ASIC must grant an applicant an Australian financial services licence if (and must not grant such a licence unless):
(a)the application was made in accordance with section 913A; and
(b)ASIC has no reason to believe that the applicant will not comply with the obligations that will apply under section 912A if the licence is granted; and
(c)The requirement in whichever of subsection (2) or (3) of this section applies is satisfied; and
(ca)the applicant has provided ASIC with any additional information requested by ASIC in relation to matters that, under this section, can be taken into account in deciding whether to grant the licence; and
(d)the applicant meets any other requirements prescribed by regulations made for the purposes of this paragraph.”
As Mr Tweed is a natural person, only s 913B(2) is relevant for the purposes of s 913B(1)(c). It provides that:
“ASIC must be satisfied that there is no reason to believe that that applicant is not of good fame or character.”
ASIC may impose conditions on an AFSL it issues.[9]
[9] s 914A
Division 4 of Part 7.6 is also concerned with the suspension and cancellation of licences. Where an AFSL is held by a natural person, s 915B provides that:
“ASIC may suspend or cancel and Australian financial services licence held by a natural person, by giving written notice to the person, if the person:
(a)ceases to carry on the financial services business; or
(b)becomes an insolvent under administration; or
(c)is convicted of serious fraud; or
(d)becomes incapable of managing their affairs because of mental or physical incapacity; or
(e)lodges with ASIC an application for ASIC to do so, which is accompanied by the documents, if any, required by regulations made for the purposes of this paragraph.”
There is no requirement in s 915B that ASIC give the person any notice of the suspension or cancellation. Section 915C provides for other circumstances in which ASIC may cancel or suspend an AFSL after giving the licensee an opportunity to appear, or be represented, at a private hearing before ASIC and to make submissions to ASIC on the matter.[10] Those circumstances occur if:
“(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;
(b)ASIC is no longer satisfied of the matter in whichever of subsection 913B(2) or (3) applied at the time the licence was granted (about whether the licensee, or the licensee’s representatives, are of good fame and character);
(c)a banning order or disqualification order under Division 8 is made against a representative of the licensee and ASIC considers that the representative’s involvement in the provision of the licensee’s financial services will significantly impair the licensee’s ability to meet its obligations under this Chapter.”[11]
“(a) the application for the licence was false or misleading in a material particular or materially misleading; or
(b)there was an omission of a material matter from the application.”[12]
The cancellation or suspension takes effect when written notice of it is given to the licensee.[13]
[10] s 915C(4)
[11] s 915C(1)
[12] s 915C(2)
[13] s 915F
In certain circumstances, ASIC can go further than suspending or cancelling an AFSL. It may go on to make a banning order which “…is a written order that prohibits a person from providing any financial services or specified financial services in specified circumstances or capacities.”[14] It takes effect when it is given to the person against whom it is made.[15] The order may prohibit the person against whom it is made from providing a financial service:
“(a) permanently; or
(b)for a specified period, unless ASIC has reason to believe that the person is not of good fame or character.”[16]
A banning order may include a provision allowing the person against whom it was made to do, subject to specified conditions, specified acts or to do specified acts in specified circumstances that the order would otherwise prohibit that person from doing.[17] The effect of a banning order is that the person against whom it is made cannot be granted an AFSL contrary to the banning order.[18]
[14] s 920B(1)
[15] s 920E(1)
[16] s 920B(2)
[17] s 920B(3)
[18] s 920C(1)
ASIC may only make a banning order after giving the person an opportunity to appear, or be represented, at a private hearing before ASIC and to make submissions to ASIC on the matter.[19] The circumstances in which ASIC may make a banning order occur if:
[19] s 920A(2)
“(a) ASIC suspends or cancels an Australian financial services licence held by the person; or
(b)the person has not complied with their obligations under section 912A; or
(ba)ASIC has reason to believe that the person will not comply with their obligations under section 912A; or
(bb)the person becomes insolvent under administration; or
(c) the person is convicted of fraud; or
(d) (Repealed)
(e) the person has not complied with a financial services law; or
(f)ASIC has reason to believe that the person will not comply with a financial services law.”[20]
[20] s 920A(1)
BACKGROUND
For the purposes of determining his application for a stay only, I will set out the facts that appear to be supported by the material lodged to date.
As at 4 August Mr Tweed was the sole director and secretary of the following companies: Country Estate and Agency Company Pty Ltd (Country Estate); Direct Share Purchasing Corporation Pty Ltd (Direct Share Purchasing); National Exchange Pty Ltd (National Exchange); National Share Purchasing Corporation Pty Ltd (National Share Purchasing); Prudential Nominees Pty Ltd (Prudential Nominees); Australian Capital Alliance Pty Ltd (Australian Capital), which was, until 6 February 2005, known as National Exchange Securities Pty Ltd; and Australian Share Purchasing Corporation Pty Ltd (Australian Share Purchasing).
Country Estate has held an AFSL (AFSL) since 4 February 2004. That licence authorises it to deal in and provide financial advice in respect of specified classes of financial products. Mr Tweed is its Responsible Officer in respect of the AFSL.
Country Estate, Direct Share Purchasing, National Exchange, National Share Purchasing and Prudential Nominees make unsolicited off-market offers to purchase financial products from investors in Australia and New Zealand.[21] ASIC instituted proceedings against National Exchange and Mr Tweed in relation to unsolicited off-market offers that National Exchange had made for the purchase of shares in Onesteel Ltd (Onesteel). It alleged that, in doing so, it had engaged in conduct in relation to a financial product or a financial service that was misleading or deceptive or likely to mislead or deceive contrary to s 1041H of the Corporations Act. At trial, Finkelstein J found that, although factually true, the offer document was misleading.[22] He also found that Mr Tweed had procured National Exchange’s sending the offers.[23] Although not reproduced in the authorised version of the report, the unauthorised shows that Finkelstein declared that:
“1. The first defendant contravened s 1041H of the Corporations Act 2001 (Cth) by representing in written offers to purchase shares in Onesteel Ltd (the offers) that the offer price was payable in full upon acceptance of the Offers whereas the price was payable in 15 equal annual instalments.
2. The second defendant:
(a) aided, abetted, counselled and procured the said contravention by the first defendant; and
(b) has been knowingly concerned in, and party to, the said contravention by the first defendant.”[24]
The Full Court of the Federal Court dismissed the appeal.[25]
[21] Examples are given at Tab G in the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T documents).
[22] Australian Securities and Investments Commission v National Exchange Pty Ltd [2003] FCA 955; (2003) 202 ALR 24
[23] [2003] FCA 955; (2003) 202 ALR 24 at 31, [20]
[24] [2003] FCA 955; (2003) 202 ALR 24 at 33
[25] National Exchange Pty Ltd v Australian Securities & Investments Commission [2004] FCAFC 90; (2004) 49 ACSR 369
ASIC also instituted proceedings against National Exchange in relation to unsolicited off-market offers it had made in relation to new shares that were to be offered to existing shareholders in Aevum Ltd (Aevum). ASIC alleged that the offers had contravened Division 5A of Part 7.9 of the Corporations Act as well as s 12CC(1) of the Australian Securities and Investments Commission Act 2001 (ASIC Act). In essence, s 12CC(1) provides that a person must not engage in conduct that is, in all the circumstances, unconscionable when engaged in trade or commerce in connection with the acquisition or possible acquisition of financial services. At trial, [26] Emmett J had decided that National Exchange’s offer had contravened s 1019E(2) of the Corporations Act in that it had not been sent out as soon as practicable after it had been dated and s 1019G(2) in that it had provided that it closed in a period shorter than a month of its date. His Honour also decided that the offer did not contain a misleading or deceptive statement that was materially misleading and did not contravene in s 1019I(4) that it be worded and presented in a clear and effective manner. His Honour canvassed the evidence in relation to ASIC’s case that the conduct of National Exchange had been unconscionable and that it had contravened s 12CC(2) of the ASIC Act. That evidence had been given by Mr Tweed. Emmett J concluded that there was no evidence that the acceptance of any of the offers was for the purpose of trade or commerce. Apart from that:
“ It may be that National Exchange has sought to take advantage of persons who are inexperienced in holding or dealing with shares in the capital of limited liability companies. However, I do not consider that the Commission has established that National Exchange has engaged in conduct that is unconscionable.”[27]
The Full Court of the Federal Court dismissed ASIC’s appeal.[28]
[26] Aevum Pty Ltd v National Exchange Pty Ltd (2004) 142 FCR 316; 23 ACLC 287. Aevum had brought separate proceedings that were brought at the same time but Emmett J decided that it did not have standing under s 1324(1) as a person whose interests have been, are or would be affected by National Exchange’s conduct.
[27] (2004) 142 FCR 316; 23 ACLC 287 at 336; 337; [103]
[28] Australian Securities & Investments Commission (ASIC) v National Exchange Pty Ltd [2005] FCAFC 226; (2005) 148 FCR 132
On 11 August 2006, ASIC notified Mr Tweed that it was concerned that he might have contravened ss 1041H, 1019E(2) and 1019G(2) of the Corporations Act and might fail to comply with a financial services law and an obligation under s 912A of the Corporations Act in the future. As required by s 920A(2), it offered Mr Tweed the opportunity to be heard before it made a decision whether he should be banned or disqualified from providing financial services.[29] Mr Tweed took advantage of the opportunity by having his counsel attend at the hearing and make oral and written submissions on his behalf.
[29] T documents, Tab 4
A delegate of ASIC decided on 30 October 2006 that Mr Tweed be banned permanently from providing financial services. He did so on several bases. The first was that Mr Tweed had failed to comply with s 1041H of the Corporations Act. That conclusion was based in part on Finkelstein J’s declaration that Mr Tweed had aided, abetted, counselled and procured the contravention of that section by National Exchange and had been knowingly concerned in, and party to, that contravention by causing the offers to be sent to shareholders in Onesteel Ltd and in part on s 7(1) of the Commonwealth Criminal Code. Section 7(1) provides that, when an offence is committed, certain persons are deemed to have taken part in committing it. Among them are those who have aided another person in committing it or who counsel of procure that person to commit the offence.[30]
[30] Commonwealth Criminal Code, ss 7(1)(c) and (d)
The delegate also decided that Mr Tweed had contravened ss 1019E(2) and 1019G(2) on the basis that he had counselled or procured National Exchange’s contravention of those sections. He took into account the finding by Emmett J in Aevum Limited v National Exchange Pty Ltd that Mr Tweed was the governing mind of National Exchange and that, through him, it had come to certain conclusions regarding those shareholders more likely to sell their shares than others.[31]
[31] (2004) 142 FCR 316; 23 ACLC 287 at 321; 335; [92]
The delegate decided that ASIC had reason to believe that Mr Tweed would not comply with the financial services law. In brief outline, he relied on a finding by Finkelstein J in Australian Securities and Investments Commission v National Exchange Pty Ltd that “… the offer had been purposely composed so that it would mislead shareholders”.[32] He also appears to have referred to Emmett J’s judgment in Aevum Pty Ltd v National Exchange Pty Ltd regarding s 12CC.
[32] [2003] FCA 955; (2003) 202 ALR 24 at 30; [19]
Having decided that Mr Tweed came within ss 920A(1)(e) and (f), he then considered Mr Tweed’s activities of making unsolicited offers and as the sole director and Responsible Officer of Country Estate, which holds an AFSL. In the past, he found, Mr Tweed had been a stock broker. Given these matters, the delegate decided that there was a real possibility that Mr Tweed might seek to re-enter the financial services industry in his own right or through a corporate vehicle. These matters justified a banning order.[33]
[33] T documents, Tab 2 at [31]
On 24 November 2006, Mr Tweed lodged an application in the Tribunal for review of the decision to make the banning order. ASIC advised him on 9 February 2007 that it no longer relied on the provisions of the Commonwealth Criminal Code to support its decision but reserved its right to submit at the hearing of the application in the Tribunal that Mr Tweed had not complied with the financial services law. Having changed a significant portion of the basis of its decision, it agreed to lodge its Statement of Facts and Contentions before Mr Tweed lodged his. Mr Tweed’s solicitors have advised ASIC that they do not consider that any proper basis for its decision remains.
On 28 February 2007, Mr Tweed applied for an order under s 41(2) of the AAT Act for the stay of the operation or implementation of ASIC’s decision.
CONSIDERATION
Section 41(2): the matters to which the Tribunal must have regard in exercising its power
I have considered s 41(2) of the AAT Act in Re VBJ and Australian Prudential Regulation Authority.[34] The following paragraphs are drawn from that case while having regard to the submissions on the law made by Mr Waller and Mr Niall. I will begin with Mr Waller’s submission that s 41(2) should be given a broad and liberal interpretation. He referred first to the judgment of
Davies, Burchett and O’Connor JJ in Yolbir v Administrative Appeals Tribunal.[35]The Court had said that:
“ It seems to us that the terms of subs (1) of s 41 confirm that subs (2) must have the broad meaning …”[36]
That statement must be read in context. Their Honours came to this conclusion at the end of an examination of a number of authorities considering whether the Tribunal was reviewing the operative decision or the decision that simply affirmed or varied the operative decision. The authorities to which it referred had concluded that it was the operative decision that was the subject of review and not the affirmation or variation decision. It then came to the following conclusion:
“ It seems to us that the terms of subs (1) of s 41 confirm that subs (2) must have the broad meaning attributed to it in these decisions. Plainly, subs (1) refers to the operative decision upon which action may be taken to implement it. It is that decision which subs (2) then permits the tribunal to say. Furthermore, subs (2) speaks of ‘the decision to which the relevant proceeding relates’, which may be stayed ‘for the purpose of securing the effectiveness of the hearing and determination of the application for review.’ A stay of a non-operative decision would plainly have nothing to do with securing the effectiveness of the hearing or the Tribunal’s determination.”[37]
[34] [2005] AATA 642; (2005) 87 ALD 747; 41 AAR 97
[35] (1994) 48 FCR 246; 33 ALD 8
[36] (1994) 48 FCR 246; 33 ALD 8 at 249; 11
[37] (1994) 48 FCR 246; 33 ALD 8 at 249; 11
Mr Waller also referred me to the judgment of Tamberlin J in Shi v Migration Institute of Australia.[38] His Honour said:
“ The subsection is framed in broad general terms, and by reference to a specific purpose. It should be given a liberal interpretation: see Yolbir v Administrative Appeals Tribunal. The power is to make an order which stays or otherwise affects the operation or implementation of a decision.”[39]
Tamberlin J did not refer in this paragraph to the context in which the Full Court had expressed that conclusion but appears to have extended its conclusion to the interpretation of the whole of s 41(2). He was, however, considering the section in the same sort of context as the Court in Yolbir. That was a context of determining the decision under review and whether that decision is capable of being stayed under s 41(2).
[38] (2003) 134 FCR 326; 78 ALD 281
[39] (2003) 134 FCR 326; 78 ALD 281 at 332; 286
Bearing in mind the breadth of interpretation that must be accorded s 41(2), it remains clear that the Tribunal may make an order affecting the operation or implementation of the decision only if it is of the opinion that it is desirable to do so after taking into account the interests of any persons affected by the review. If it forms that opinion, it may make an order staying the operation or implementation of the decision, or part of it, to which the proceeding relates. That order, however, must be one that it considers appropriate to secure the effectiveness of the hearing and determination of the application for review.
Taking first the word “desirable” in s 41(2), I considered it in Re VBJ and Australian Prudential Regulation Authority.[40] I concluded that it meant “what was worth having” and that what was worth having had to be assessed after taking into account the interests of any persons who might be affected by the review of the decision. Those persons whose interests might be affected will include the parties to the application but will go beyond them to include those whose interests were taken into account in making the decision or whose interests were taken into account by Parliament in giving APRA the power to make the decision as part of its regulatory role.[41] Other persons who have had a banning order made against them will not be persons whose interests are affected by the decision under review simply by virtue of their having been the subject of such an order. They may have an interest in the outcome so that they may compare the outcome with the outcome in those circumstances. That, however, is not an interest that may be affected by the particular review to which s 41(2) refers.
[40] [2005] AATA 642; (2005) 87 ALD 747; 41 AAR 97
[41] Those persons may not be able to apply for review of the decision under s. 27(1) of the AAT Act as they may not be “persons … whose interests are affected by the decision” (emphasis added). That does not mean that they are not “persons who may be affected by the review” (emphasis added).
In the context of an order made by APRA under ss 120A(2) and (3) of the Superannuation Industry (Supervision) Act 1993 disqualifying VBJ from being a trustee, investment manager or custodian of a superannuation entity, I decided that s 41(2) of the AAT Act required me to include among the matters I took into account the following:
the prospects of success of VBJ’s application for review of APRA’s decision;
the consequences for APRA in carrying out its functions under the SIS Act and for those whose interests are affected by the review of the decision if the stay were, or were not, granted;
the consequences for VBJ if the stay were, or were not, granted;
any conditions, such as undertakings, that could ameliorate any consequences of either granting or refusing a stay; and
whether review is sought of APRA’s reviewable decision or of its decision after its own review.
The fifth matter in this list is not relevant in this case as it applies to the particular circumstances of the SIS Act that permit the Tribunal to exercise its powers under s 41(2) of the AAT Act in relation to APRA’s initial decision (which the Tribunal may not review) as well as its decision after its internal review of that decision (which the Tribunal may review).
The first four remain equally applicable when related to the context of ASIC’s decision regarding Mr Tweed in the context of the financial services provisions of the Companies Act. The second requires a little more consideration. A banning order both imposes a penalty and protects the public.[42] It is punitive in the sense that it prevents a person from engaging or continuing to engage in a particular activity. At the same time, it is intended to protect the public or at least those members of the public who may otherwise seek from the person the services that are the subject of the banning order. It is intended to protect them by preventing a person from providing those services when that person is found not to meet the standards that Parliament has specified as the standards that must be met by those providing those services. Therefore, regard should be had to the interests of those whom Parliament has sought to protect and whose interests may be affected by the review of the banning order.
[42] Rich v Australian Securities and Investments Commission (2004) 220 CLR 129 at [26]-[38]
The next aspect of s 41(2) that should be considered in this case concerns the principles that can be drawn from the previous authorities. Although pre-dating Yolbir and Shi by almost ten years, Deputy President Hall’s analysis of the authorities in Re Repatriation Commission and Delkou[43] relating to stay provisions is consistent with both of them and remains relevant today:
“(8) The power conferred by s41(2) of the Act is a power to make an order ‘staying or otherwise affecting the operation or implementation of the decision or a part of the decision’ sought to be reviewed. It is a power that enables the Tribunal to preserve the status quo pending the hearing and determination of the application for review where the ‘effectiveness’ of the review may be jeopardized if the decision, in the meantime, is carried into operation. Thus the power may be exercised when it is appropriate to do so to ensure that the application for review, if successful, is not rendered nugatory: cf Polini v Gray (1879) 12 Ch D 438 at 446 per Colton LJ; cf J C Scott Constructions v Mermaid Waters Tavern Pty Ltd [1983] 2 Qd R 243.
(9) The Tribunal commonly grants a stay in respect of deportation orders. Otherwise the effectiveness of the review would almost certainly be jeopardized because the applicant would be unable to attend the hearing and to enjoy the benefits of his application for review, if successful: cf Kioa v West (1984) 6 ALN N21. On occasions, the Tribunal has stayed the operation of decisions cancelling social welfare benefits where, deprived of that support, the applicant faces serious hardship. Notwithstanding the possibility that, if the application for review is unsuccessful, benefits may be paid in the meantime to which the applicant was not entitled and which may be irrecoverable, the Tribunal has recognized that, in a very practical sense, the review may be rendered nugatory unless the applicant is provided with the means of sustenance pending the hearing: cf Re Dart and Director-General of Social Services (1982) 4 ALD 553.
(10) However, the Tribunal has also recognized that the power conferred by s41(2) needs to be construed broadly and that it must be capable of adaptation to the wide variety of situations that arise in its diverse administrative review jurisdictions. Thus in Re Dekanic and Tax Agents' Board of New South Wales (1982) 6 ALD 240 at 241, the President said: ‘In applying s41, the principles which are adopted in other places for other purposes have no direct relevance. Moreover, the jurisdiction of the Tribunal is wide and diverse and it is not practicable to lay down a principle or a set of specific principles applicable to every type of case in respect of which there may be an application for a stay.’
A stay order may therefore be appropriate to ensure that the hearing takes place at a suitable time after there has been adequate preparation for the hearing by both parties: see RC and Director-General of Social Services (1981) 3 ALD 334 at 341; cf Re Dart at 556.”[44]
[43] (1985) 8 ALD 454
[44] (1985) 8 ALD 454 at 457-458
In 1986, the Honourable JBK Williams, Senior Member, also considered the power. Having regard to previous decisions in the Tribunal, he set out the matters to which it was proper to have regard in deciding whether or not to grant a stay sought by the applicant for review in that case, the Commonwealth. Those matters were summarised in the headnote to the case:
“(a) the likely prospect of recovery by the Commonwealth of compensation paid to the respondent pursuant to the determination in favour of the respondent in the event that the determination was not upheld on review;
(b)the prospect of success of the Commonwealth's application for review of the determination;
(c)the hardship to the respondent that might result if a stay order were made.”[45]
[45] Re Commonwealth of Australia and Quirke (1986) 9 ALD 92 at 92
These principles were stated in the context of an application to review a decision regarding compensation paid to a Commonwealth employee. At times, they have been applied directly in the context of other decisions related to the payment of benefits to individuals.[46] At others, they have been adapted to suit the circumstances of decisions far divorced from such payments.[47] In each case, the principles are fashioned to securing the effectiveness of the hearing and determination of the application for review. For the reasons I gave in Re Kurukkal and Minister for Immigration and Multicultural and Indigenous Affairs,[48] I do not consider that the principles should be fashioned on the narrower basis of securing the processes of the hearing and the processes of the determination as decided in Re Crossan and Minister for Immigration and Multicultural and Indigenous Affairs[49] in the context of an application for review of a decision to cancel a visa under s 501 of the Migration Act 1958. I have already set out the principles that I consider appropriate in the context of a decision to make a banning order under the Corporations Act.[50]
[46] e.g. Re Bishop and Secretary, Department of Social Security (1989) 18 ALD 661 (Senior Member Purcell)
[47] e.g. Re Edwards and Civil Aviation Safety Authority (2003) 74 ALD 572 (Senior Member Beddoe).
[48] (2004) 38 AAR 482
[49] [2002] AATA 216 at 27
[50] see [3] – [10] above
Should an order be made under s. 41(2) in this case?
On the basis of the letter dated 8 November 2006 from CPA Australia to Mr Tweed,[51] I find that his membership of CPA Australia was suspended with effect from that same day. It was suspended pending a hearing of a disciplinary committee of CPA Australia. Mr Tweed was required to return his membership certificate by 8 December 2006. He also had to provide a sufficient and satisfactory explanation of ASIC’s finding that he had failed to comply with a financial services law and its belief that he would not comply with a financial services law in the future. Among the consequences of the suspension of his membership, Mr Tweed was no longer permitted to use the CPA designation, display his membership certificate, receive a member’s rating for continuing professional development or use the CPA library.
[51] Exhibit SJM-3 to the Affidavit of Simon Jacob Morris.
Mr Tweed advised CPA Australia on 8 December 2006 that he had lodged an application for review with the Tribunal.[52] In light of his application, CPA Australia stayed referral of the matter to the disciplinary committee but continued the suspension of his membership. If he were granted a stay of the operation of ASIC’s decision, it advised him that it would lift the suspension pending further orders from the Tribunal or the finalisation of the proceedings.[53] CPA Australia’s advice was in its letter dated 15 December 2006. Mr Tweed lodged his request for a stay order in the Tribunal on 28 February 2007.
[52] Exhibit SJM-3 to the Affidavit of Simon Jacob Morris
[53] Letter dated 15 December 2006: Exhibit SJM-3 to the Affidavit of Simon Jacob Morris
On the basis of a letter dated 19 March 2007 addressed to Mr Tweed, I find that he has sought legal advice regarding a proposal to conduct a business of making unsolicited offers to purchase shares in England.[54] He was advised that such a business is likely to require authorisation from the United Kingdom’s Financial Services Authority (FSA). Mr Tweed also sought advice regarding the banning order that has been made. He was advised that he would need to disclose the existence of the banning order and that it would be extremely unlikely that the FSA would consider him to be a fit and proper person to be authorised to conduct such a business.
[54] Exhibit SJM-6 to the Affidavit of Simon Jacob Morris
There is no question that the banning order has an adverse effect on Mr Tweed. Its negative impact on his ability to conduct a business of the same sort in England is an adverse effect. Mr Tweed has not given evidence, written or otherwise. Despite that, I accept that the banning order has also had an effect on an administrative function connected with the operation of the businesses with which he is involved in Australia. The evidence of his solicitor, Mr Morris, is that Mr Tweed uses his membership of CPA Australia in the administration of his businesses. He uses it by certifying that documents are true and correct copies of originals when he sends shareholders’ acceptance forms to the relevant company’s registry. This function is performed on an almost daily basis. Since the banning order, Mr Tweed has engaged lawyers to perform that function.
Apart from this matter, the banning order has had no effect on the operation of Mr Tweed’s ability to make unsolicited off-market offers. Mr Tweed is inconvenienced in the administration of his business and may even suffer some additional cost but not so much that evidence was given of it.
Mr Waller did not make any submission to the effect that Mr Tweed’s reputation would be damaged if the banning order were not stayed. To the extent that any damage has been caused to it, that damage has already occurred. That finding is supported by the article posted on the website of The Age on 20 February 2007.[55] That article described Mr Tweed in unflattering terms.
[55] Exhibit SJM-5 to the Affidavit of Simon Jacob Morris
Having regard to other persons who may be affected by Mr Tweed’s current business operations in Australia, there are none. That is because the banning order has no effect on his ability to continue to make unsolicited off-market offers for shares. What it does have an effect upon is Mr Tweed’s ability to provide financial services. It is said that he has no intention of doing so. There is no evidence to suggest to the contrary but one of the intended outcomes of a banning order is to protect the public from those who are not regarded as appropriate to provide financial services whether they currently intend to provide them or not.
On the evidence that has been presented to date in the T documents, Mr Tweed’s case cannot be said to be without merit. It remains to be seen whether ASIC will, as it may, present other evidence and other grounds upon which to support its decision.
If I were to weigh the effect of the banning order on Mr Tweed’s interests and the fact that his case cannot be said to be without merit against the extent to which the banning order currently protects the public, I would have to say that they tilted in favour of Mr Tweed. That they do, does not persuade me that I should make a stay order. That is because any stay order that I would be permitted to make under s 41(2) would have to be appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review. I have difficulty in seeing how an order staying the operation or implementation of the decision to make a banning order would secure either. Mr Tweed is inconvenienced and perhaps suffering a little expense as a result of the decision. His Australian business interests are continuing despite the order. As far as his hopes for the expansion of his business are concerned, it seems unlikely that a stay of the decision would have any effect at all. The fact that the decision has been made and has not been set aside on review would be the issue for the English authorities. It would make no difference whether the decision has been stayed or not. Mr Tweed’s situation can be contrasted with that of, for example, VBJ in VBJ and Australian Prudential Regulation Authority. I made an order affecting the implementation of the decision by ordering that APRA could not publish notice of the decision it had made in the Commonwealth Government Gazette. I said:
“If VBJ’s name is revealed at this stage, I am satisfied that there is a very real possibility that the effectiveness of APRA’s review of its reviewable decision would be significantly diminished. APRA could conduct its review effectively as far as its own procedures and processes were concerned but the effectiveness of that hearing and APRA’s determination of his request would be diminished for VBJ. Even if APRA were to revoke its decision and VBJ were completely vindicated, his reputation would have been called into question and doubts raised about him. Such questions and doubts linger in the minds of many once they have been raised in the first place.”[56]
[56] [2005] AATA 642; (2005) 87 ALD 747; 41 AAR 97 at [63]
Therefore, I have decided that it is not appropriate to make an order staying or otherwise affecting the operation or implementation of ASICs’ decision to make a banning order against Mr Tweed.
I certify that the forty-two preceding paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: ...............................................................
Jayne Rathjen Associate
Date of Stay Hearing 23 March 2007
Date of Decision 13 April 2007
Counsel for the Applicant Mr Ian G. Waller
Solicitor for the Applicant Mr S. Morris
Piper AldermanCounsel for the Respondent Mr Richard M. Niall
Solicitor for the Respondent Mr A. Templer
Australian Securities & Investments Commission
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