Rich and Australian Securities and Investments Commission
[2003] AATA 1044
•13 October 2003
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2003] AATA 1044
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2003/532
GENERAL ADMINISTRATIVE DIVISION ) Re JOHN DAVID RICH Applicant
And
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Respondent
DECISION
Tribunal Justice Garry Downes, President Date13 October 2003
PlaceSydney
Decision
1. Grant leave to the applicant to inspect the documents produced to the Tribunal pursuant to summons dated 25 September 2003 (‘the summons documents’) and permit the applicant’s solicitor to have custody of the summons documents and to make two copies of those documents it seeks to tender.
2. The applicant by Tuesday 14 October 2003 to identify which summons documents it wishes to tender and to lodge one copy of those documents and any additional submissions with the Tribunal.
3. The respondent may seek to tender additional summons documents and/or make further submissions in reply by Wednesday 15 October 2003.
4. If the respondent seeks to tender further documents or make further submissions the applicant may file submissions in reply by Thursday 16 October 2003.
5. The applicant’s solicitor to return the summons documents to the Tribunal on the completion of the above steps.
...............................................
President
CATCHWORDS
PRACTICE AND PROCEDURE – access given to summons documents – documents relevant to respondent’s conduct under s 536 of the Corporations Act 2001 – such conduct can fall within the Tribunal’s jurisdiction – evidence of conduct relevant to applicant’s entitlement to a statement under s 28 of the Administrative Appeals Tribunal Act 1975
Administrative Appeals Tribunal Act 1975, ss 25, 28, 40, 44
Australian Securities and Investments Commission Act 2001, subs 11(4)
Corporations Act 2001, ss 536, 1317B
Corporations Law, subs 597(1), 597(2), 1292(2)Creswick v Australian Securities Commission (unreported, Foster J, 23 March 1993)
Hongkongbank of Australia Ltd v Australian Securities Commission & Ors (1992) 40 FCR 402
Mercantile Mutual Life Insurance Co Ltd v Australian Securities Commission (1992) 40 FCR 409REASONS FOR DECISION
13 October 2003 Justice Garry Downes, President 1. John David Rich made a complaint pursuant to s 536 of the Corporations Act 2001 (“the Corporations Act”) to the Australian Securities and Investments Commission, relating to the liquidation of One.Tel Limited. After at least some preliminary consideration the Commission declined to proceed further. Mr Rich applied to the Commission pursuant to the provisions of s 28 of the Administrative Appeals Tribunal Act 1975 (“the Act”) for reasons for its decision. The Commission declined to give reasons claiming that it had no obligation to do so because its decision was not reviewable by the Administrative Appeals Tribunal.
2. I have before me at present an application pursuant to subs 28(1AC) of the Act for a decision as to whether Mr Rich is entitled to the reasons. In the course of the progress of the application the applicant sought the issue of a summons under s 40 of the Act seeking the production by the Commission of certain documents, broadly speaking, related to the activities of the Commission in consequence of the complaint.
3. On 24 September last I granted leave for the issue of such a summons but I reserved to the hearing all questions as to whether the documents produced pursuant to the summons should be made available to the applicant. The Commission has produced a folder of documents which answer the terms of the summons but has objected to their production to the applicant. The ground of the objection is that the application must fail whatever the facts ultimately turn out to be and to make the documents available to the applicant in those circumstances would be to grant the applicant an entitlement to which the applicant does not have.
4. After hearing argument on this question I indicated that I would like some time, perhaps overnight, to consider my decision. However I have now come to a conclusion on the matter and I think it is convenient for me to state it immediately.
5. I should say at the outset that the matter I am concerned with on this limited question of the production of documents is whether any facts capable of being found in the present case could give rise to jurisdiction under s 536. I am not considering whether jurisdiction under s 536 is attracted in this case. That will depend upon an examination of all the material including any documents that are tendered before me out of documents which would ultimately be produced to the applicant if I were to find in his favour.
6. So I turn on this limited and preliminary question to a consideration of the question of whether the Tribunal can ever review activity under s 536 of the Corporations Act. There is, in administrative law terms, a distinction between functions and powers. The distinction was described by Lockhart J in Mercantile Mutual Life Insurance Co Ltd v Australian Securities Commission (1992) 40 FCR 409 at 422; 112 ALR 463 at 475 as follows:
“The ASC Act draws a distinction between the functions and powers of the ASC, a distinction well recognised in the law with respect to the functions and powers of administrative bodies. The distinction is between functions or purposes or activities of an administrative body on the one hand, and the powers conferred upon it to perform or execute those functions, purposes and activities on the other. “
7. The argument put to me on behalf of the Commission is to the effect that s 536 is concerned exclusively with functions rather than powers; that activity under s 536 is ultimately pursuant to a power conferred by subs 11(4) of the Australian Securities and Investments Commission Act 2001 and that since there is no right of review in the Administrative Appeals Tribunal of decisions under s 11(4) of the ASIC Act the Tribunal has no power to review decisions of the Commission under s 536.
8. There appears to me to be an unstated premise in this argument which must go along the following lines: that the Tribunal may only review a decision when the statutory provision conferring the power, as opposed to the function, is a section which is subject to review.
9. The section which the applicant says the Commission was acting under when it decided to discontinue such inquiries as it was making and the section under which the complaint was originally made is s 536 of the Corporations Act. That section is as follows:
“536 Supervision of liquidators
(1A) In this section:
liquidator includes a provision liquidator
(1) Where:
(a)it appears to the Court or to ASIC that a liquidator has not faithfully performed or is not faithfully performing his or her duties or has not observed or is not observing:
(i)a requirement of the Court; or
(ii)a requirement of this Act, of the regulations or of the rules; or
(b)a complaint is made to the Court or to ASIC by any person with respect to the conduct of a liquidator in connection with the performance of his or her duties;
the Court or ASIC, as the case may be, may inquire into the matter and, where the Court or ASIC so inquires, may take such action as it thinks fit.
(2)ASIC may report to the Court any matter that in its opinion is a misfeasance, neglect or omission on the part of the liquidator and the Court may order the liquidator to make good any loss that the estate of the company has sustained hereby and may make such other order or orders as it thinks fit.
(3)The Court may at any time require a liquidator to answer any inquiry in relation to the winding up and may examine the liquidator or any other person on oath concerning the winding up and may direct an investigation to be made of the books of the liquidator.”
Subsection 536(1) in terms describes what the Commission may do and does so in these words:
“[The Commission] may inquire into the matter and, where... [the Commission] so inquires, the Court may take such action as it thinks fit.”
10. Uninstructed by authority I should have thought that these words describe not only a function but actually confer power itself relating to that function. However, it has been argued before me that a number of decisions of the Federal Court of Australia are to the contrary and it is necessary for me briefly to refer to them.
11. The first decision is the decision of the Full Court of the Federal Court sitting at first instance in Hongkongbank of Australia Ltd v Australian Securities Commission & Ors (1992) 40 FCR 402; 108 ALR 70. That case involved an appeal under s 44 of the Act relating to the review by the Tribunal of a decision under subs 597(1) of the then Corporations Law. It is important that I should set out the relevant parts of s 597:
“Examining a person about a corporation
597. (1) In this section, a reference, in relation to a corporation, to a prescribed person, is a reference to an official manager, liquidator or provisional liquidator of the corporation or to any other person authorised by the Commission to make applications under this section or to make an application under this section in relation to that corporation.
(2) Where it appears to the Commission or to a prescribed person that:
(a)a person who has taken part or been concerned in the promotion, formation, management, administration or winding up of, or has otherwise taken part or been concerned in affairs of, a corporation has been, or may have been, guilty of fraud, negligence, default, breach of trust, breach of duty or other misconduct in relation to that corporation; or
(b) a person may be capable of giving information in relation to the promotion, formation, management, administration or winding up of, or otherwise in relation to affairs of, a corporation;
the Commission or prescribed person may apply to the Court for an order under this section in relation to the person.”
12. What is important to note about the Hongkongbank case is that it was subs 597(1) of the Corporations Law which was under consideration. That subsection was in the form of a definition section which gave meaning to the phrase “prescribed person” where it appeared subsequently in the section. The effect of subs 597(1) was to permit the Commission to authorise other persons to make applications under the substantive provisions of the section.
13. The decision in the case was exclusively concerned with the provisions of subs 597(1) and found that the source of the power to act under subs 597(1) was to be found not in the subsection itself but in s 11(4). The court was not concerned with subs 597(2) and whether it was the source of any power within itself. In a subsequent case to which I will refer further in a minute, Mercantile Mutual Life Insurance Co v Australian Securities Commission (1993) 40 FCR 409 at 411; 112 ALR 463 at 465, Black CJ said that the question of where the power associated with subs 597(2) lay was left open by the court in the Hongkongbank case. However, it does occur to me that, although speaking obiter, the Full Court in the Hongkongbank may not have intended to leave the issue open because they said at 40 FCR 407; 108 ALR 75:
“The result is that s 597(2) of the Corporations Law, as we have indicated, relevantly confers a function or power upon the ASC within the meaning of s 11(1) of the ASC Act, but is s 597(1) a law of like character? That is a vital question for the disposition of the present appeals. The central provision in section 597 is found in subs (2). It provides for applications to be made for orders in relation to certain persons. The persons are those described in paras (a) and (b) of s 597(2). The ASC may make the application itself.”
14. No doubt Black CJ had in mind the use of the word "or" in the phrase, "function or power" when he made the remarks I have referred to. However, it seems to me that the Full Court in Hongkongbank may not have intended to leave open two alternatives, because they went on to say that the vital question in the appeal before them was whether subs 597(1) was a law of like character to subs 597(2). I apprehend that what they were saying was that if subs 597(1) were the same as subs 597(2), the difficulties before them would not arise.
15. In the result, it seems to me that the remarks of the Full Court in the Hongkongbank case, distinguishing subs 597(2) from subs 597(1), are most pertinent for the determination of the issue with which I have to grapple. I turn now to the second case, Mercantile Mutual, to which I have already referred. That case also involved emphasis on subs 597(1) rather than subs 597(2) and there are a number of observations made by the judges in that case which seem to me to support the argument put before me on behalf of the applicant.
16. I note, for example, the reference to which I have already referred in the decision of Black CJ at 40 FCR 411 and his observation at 413 by which he referred to:
“s 11(4) of the ASC Act and s 597 of the Corporations Law working in necessary combination.”
Lockhart J at 420, referring to the Hongkongbank case, said:
“But the court did not exclude s 597 as the source of a function of the ASC to authorise persons to make such applications as the passage above demonstrates. The court there expressly left open the question of whether s 11(4) was a source of power of the ASC to perform the function of authorisation, and whether s 597 conferred that function upon it. Whether s 11(4) is such a source of power arises squarely in the present case.”
At 422, Lockhart J said the following:
“Section 597(2) expressly empowers the ASC or a "prescribed person" to apply to a court for an order under s 597 in relation to a person.”
Again, at 427 he said:
“In this sense the power to appoint some person as a "prescribed person" is "expressed to be conferred" "under" (and probably "by") s 597(1) and (2).”
At 440, Gummow J said this:
“Section 597(2) makes provision for the specific function of making applications for court orders, in aid of a more broadly outlined function of concern with misconduct or possible misconduct of the affairs of corporations, whether or not the corporation in question has been wound up. The ASC may exercise its specific function directly by itself applying to the court. Section 597(2) also provides for this to be undertaken by a “prescribed person”. That class is defined in s 597(1) so as to include persons authorised by the ASC, whether to make an application in relation to a particular corporation or, more generally, “to make applications under this section”..”
At 442 he said this:
“Is the power conferred under s 597? It is true that the power appertains and attaches to, and is exercisable in respect of, functions conferred by s 597. In a sense, the power may be said to arise “under”, meaning “by reason of the existence of”, the function conferred by s 597”.
17. It is important to note that the issue in the Mercantile Mutual case was not whether the Administrative Appeals Tribunal had any jurisdiction but whether an authorisation under subs 597(1), which purported solely to depend upon power conferred by s 597, was capable of being supported by reference to subs 11(4). Accordingly, the issue in the Mercantile Mutual case was quite different to the issue before me and one would not expect to find other than oblique references in that decision which touch upon the issue before me.
18. The third of the cases that have been referred to me this morning is the decision of Foster J in Creswick v Australian Securities Commission (unreported, Foster J, 23 March 1993). It is the closest of all three decisions to the facts of this case. The matter before Foster J related to the jurisdiction of the Administrative Appeals Tribunal to review a refusal to inquire under subs 1292(2) of the Corporations Law.. That section conferred on a board, on an application by the Commission, the right to cancel or suspend the registration of a liquidator. After referring to s 25 of the Administrative Appeals Tribunal Act and to s 1317B of the Corporations Law, Foster J concluded that the Tribunal had no jurisdiction. He did so in the following passages:
“The question is therefore whether the ASC’s refusal was “a decision made under this law”, that is the Corporations Law. It appears that the only provision of the Corporations Law which can qualify for consideration in this regard is s 1292(2)(d) which I have set out above. The learned Deputy President held that he could not found jurisdiction to review upon this provision as the reasoning in the decision of the Full Court of this court in the case of Hong Kong Bank if Australia Limited & Anor v Australian Securities Commission & Ors (1992) 108 ALR 70 prevented him from doing so.
“In this, I consider that he was plainly correct. The Full Court was considering in that case s 597(1) of the Corporations Law. They said of that section, at page 75, that it was “not expressed as a dispositive provision creating rights or liabilities or opposing powers or functions”.. I am satisfied that the same must be said of the provisions of s 1292(2) in so far as they refer to the role of the ASC. The subsection does no more than identify the ASC as the party to make the application contemplated in it. The decision to make the application is not authorised by the section. The decision is not a decision under the law. The authorisation thus must be sought elsewhere. See also Mercantile Mutual Insurance Company Limited & Anor v Australian Securities Commission & Ors (Full Federal Court, 26 February 1993, unreported).”
19. It seems to me that there are some distinguishing features between the remarks of Foster J and the facts with which I am faced. They appear in the following two sentences I have just quoted above: “The subsection does no more than identify the ASC as the party to make the application contemplated in it. The decision to make the application is not authorised by the section”.
20. I turn to a brief analysis of the jurisdictional basis for the application in terms of the statutory provisions and I begin by reference to s 25 of the Administrative Appeals Tribunal Act. Subsection 25(1) is as follows:
“(1)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; or
(b)for the review of decisions made in the exercise of powers conferred or that may be conferred by another enactment having effect under that enactment.”
21. I am conscious of the fact that s 25 refers to the exercise of powers but it does so by reference both to enactments granting powers which also confer the right of review as well as to enactments in which the conferral of the right of review and the conferral of the power may be different. So far as I am aware it is only the words I have referred to in s 25 which, in terms of statutory provisions, address the role of the Administrative Appeals Tribunal by reference to “decisions made in the exercise of powers”. When I turn to s 1317B of the Corporations Act, which is the section conferring power on the Tribunal to review decisions of the Commission made under the Corporations Act, I do not find any reference to powers. The right of review provided for in s 1317B is conferred simply in terms of decisions made under the Corporations Act. It follows, as Foster J said in his decision, that the primary consideration is whether there has been “a decision made under this law”.
22. It seems to me that the power or function under s 536 to consider and act upon allegations that a liquidator has failed to perform his functions involves conduct different to that described by Foster J when finding that there was no jurisdiction in Creswick. In particular, it seems to me that s 536 does more than identify the ASC as the party who can make an application. It also seems to me that it is not correct to say that the conduct is not authorised by the section. Indeed it seems to me that s 536 spells out in very plain words what is the function of the Commission in terms which also confer power on it to carry out that function. Words such as "may inquire", "may report" and similar phrases are phrases which speak to me of power as well as function.
23. For reasons I have given above I do not read the decisions in any of the cases I have been referred to as containing any findings, obiter or otherwise, which would have the effect of compelling a conclusion that the Administrative Appeals Tribunal does not have power to review decisions made under s 536 of the Corporations Act. My own examination of the statutory provisions causes me to think that the Tribunal does have that jurisdiction.
24. I accordingly conclude, to the extent to which it is relevant to the question of the summons, that the Administrative Appeals Tribunal does have jurisdiction under s 536 and that being so, depending upon the facts as they are ultimately found, may determine that a decision has been made under s 536 which will be subject to review. I add, however, as I mentioned at the outset, that nothing I have said to date is intended to be any finding that there has been any conduct by the Commission under s 536. Whether or not there has been such conduct will depend upon findings of fact made after all the evidence has been adduced.
25. I accordingly conclude that it is not appropriate to decline to permit the documents that have been produced to the Tribunal to be made available to the applicant by reason only of the hopelessness of the applicant's case. As I understand the position of the respondent it is that whilst the applicant will be bound by the ordinary obligations relating to confidentiality with respect to documents produced on subpoena or summons, there are no other particular matters which the respondent wishes to put before me relating to the production of the documents to the applicant save for one.
26. The respondent has conveniently isolated one document which is an attachment to another document in the volume and claimed that it is not within the terms of the summons and ought to be excluded from the documents to be produced. I have examined that document and the body of the document which refers to it and I conclude that the respondent's claim is correct. I see no relevance of the document to the terms of the summons and in those circumstances, although it is referred to in a document which is within the summons, it seems to me that it can be conveniently removed and need not be made available to the applicant.
I certify that the twenty-six (26) preceding paragraphs are a true copy of the reasons for the decision herein of Justice Garry Downes, President
Signed: .......................................................................................
Associate
Date/s of Hearing 13 October 2003
Date of Decision 13 October 2003
Counsel for the Applicant G Flick SC
Solicitor for the Applicant Joanne Kelly
Counsel for the Respondent R HendersonSolicitor for the Respondent Australian Securities and Investments Commission
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