Rogers and Australian Securities and Investments Commission

[2024] AATA 3161

Rogers and Australian Securities and Investments Commission [2024] AATA 3161 (30 July 2024)

Division:TAXATION AND COMMERCIAL DIVISION

File Number(s):      2023/9882

Re:Stephen   Rogers

APPLICANT

AndAustralian Securities and Investments Commission

RESPONDENT

DECISION

Tribunal:Deputy President G Lazanas

Date:30 July 2024

Place:Melbourne

The Tribunal has jurisdiction to consider the Additional Client Files referred to by the Respondent and included in the T-Documents when reviewing the Respondent’s decision to issue an instrument to the Applicant under ss 921K and 921L of the Corporations Act.

.....................[SGD]........................

Deputy President G Lazanas

CATCHWORDS

PRACTICE AND PROCEDURE – whether Tribunal has jurisdiction to consider certain documents and information included in T-Documents referred to as Additional Client Files – where Additional Client Files were not before first instance decision-maker – where Additional Client Files pre-dated the reviewable decision of the decision-maker and could have been considered and relied upon – no relevant limitations in Corporations Act – no change in the nature of the decision or of the question before the decision-maker – not a different statutory question than that which was decided by the decision-maker – whether any procedural unfairness – held Tribunal has jurisdiction to consider Additional Client Files

LEGISLATION

Administrative Appeals Tribunal Act 1975 (Cth) ss 37, 39, 43
Corporations Act 2001 (Cth) ss 921E, 921K, 921L, 921P, 961B, 961G, 961J, 1041H

CASES
Australian Securities and Investments Commission v Murdaca [2008] FCA 1399
Callychurn and Australian Securities and Investments Commission [2019] AATA 4600
Frugtniet v Australian Securities and Investments Commission [2019] HCA 16; (2019) 266 CLR 250
Murdaca v Australian Securities and Investments Commission [2009] FCAFC 92; (2009) 178 FCR 119
Re Brian Lawlor Automotive Pty Ltd and Collector of Customs (New South Wales) (1978) 1 ALD 167
Re Control Investment Pty Ltd and Australian Broadcasting Tribunal (No 2) (1981) 3 ALD 88
Rogers and Australian Securities and Investments Commission [2024] AATA 954
Schroeder and Australian Securities and Investments Commission [2020] AATA 2453
Secretary, Department of Environment, Energy and Climate Action v Hanson Construction Materials Pty Ltd (2023) 71 VLR 137; [2023] VSC 353
Shi v Migration Agents Registration Authority [2008] HCA 31; (2008) 235 CLR 286

Townshend and Australian Securities and Investments Commission [2023] AATA 3810

REASONS FOR DECISION

Deputy President G Lazanas

30 July 2024

INTRODUCTION

1. Mr Stephen Rogers has asked the Tribunal to determine a preliminary question related to the jurisdiction of the Tribunal with respect to reviewing certain documents and information referred to by ASIC as “the Additional Client Files”. Broadly, the Additional Client Files - comprising approximately 2,200 pages - were contained in the T-Documents filed by ASIC with the Tribunal pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act).

2. Mr Rogers objected to the Tribunal having regard to the Additional Client Files on the basis that they were not before the first instance decision-maker and, consequently, not relied upon in the decision made pursuant to the Corporations Act 2001 (Cth) (Corporations Act). Instead, the decision made by the decision-maker and the subject of review by the Tribunal was based on a single instance of allegedly deficient financial advice and services provided by Mr Rogers to an individual client. Mr Rogers claimed ASIC’s reliance on the Additional Client Files of allegedly deficient advice by him were “post-decision allegations”. Mr Rogers also claimed these were outside the Tribunal’s jurisdiction because they were never considered by the decision-maker, being the Sitting Panel of the Financial Services and Credit Panel (FSCP). He maintained that the Tribunal was restricted to a consideration of events up to the point of the Reviewable Decision and not those occurring afterwards.

3. As these reasons will explain, the consideration of the Additional Client Files does not change the statutory question to be considered by the Tribunal on review of the relevant decision. It follows, that the Tribunal has jurisdiction to consider the Additional Client Files when exercising its powers to review the relevant decision, even though the decision-maker did not consider the Additional Client Files.

   THE PROCEDURAL BACKGROUND

4. The relevant facts in relation to the preliminary question are not in dispute. They are set out in the respective submissions filed by Mr Rogers and ASIC with respect to the jurisdiction issue. What follows is drawn from those materials. Of particular significance for present purposes is the nature of the decision under review by the Tribunal.

5. On 12 September 2023, the FSCP issued a Proposed Action Notice (PAN) dated 31 August 2023 to Mr Rogers under s 921P of the Corporations Act. Mr Rogers was informed that the FSCP reasonably believed, pursuant to s 921K(1)(d), that he had contravened financial services laws, namely ss 961B(1), 961G, 961J(1), 1041H(1) and s 921E(3) of the Corporations Act. Accordingly, it was proposed that an instrument be issued cancelling his registration as a “relevant provider” and prohibiting him from re-registration for a period of two years. The PAN contained attachments which set out the grounds on which the contraventions were said to be based and the documents on which the FSCP relied. The FSCP’s concerns centred on the provision of advice by Mr Rogers to a single client in May and June 2022. Mr Rogers was invited to, within 28 days, make a submission in writing or request a hearing be held.

6. On 10 October 2023, Mr Rogers provided written submissions in response to the PAN.

7. On 1 December 2023, the FSCP decided to issue an instrument pursuant to s 921L(1) of the Corporations Act cancelling the registration of Mr Rogers as a “relevant provider” and prohibiting him from re-registration for a period of two years (Reviewable Decision).

8. On 21 December 2023, Mr Rogers filed an application for review of the Reviewable Decision.

9. On 12 March 2024, Mr Rogers applied for a stay of the Reviewable Decision. On 3 May 2024 (following an interlocutory hearing on 17 April 2024), the Tribunal granted Mr Rogers a stay of the Reviewable Decision, pending the hearing and determination of the application for review of the Reviewable Decision: Rogers and Australian Securities and Investments Commission [2024] AATA 954.

10. On 22 April 2024, ASIC filed its Statement of Facts, Issues and Contentions (SFIC) in accordance with directions made by the Tribunal for ASIC to file its SFIC first. In its SFIC, ASIC referred not only to the conduct of Mr Rogers in relation to the provision of advice to a single client in May and June 2022 as per the Reviewable Decision, but also to the conduct of Mr Rogers in relation to the provision of advice and services to six additional clients and or client groups being the Additional Client Files.

11. It was not in dispute between the parties that the following statutory questions were before the decision-maker. First, does the decision-maker reasonably believe, pursuant to s 921K(1)(d) of the Corporations Act that Mr Rogers as the relevant provider has contravened a financial services law? Secondly, if so, should it issue an instrument of the kind set out in s 921L? Thirdly, if an instrument is to be issued, what are the terms of that instrument?

12. Paragraph 921K(1)(d) of the Corporations Act relevantly provides that “a Financial Services and Credit Panel may make an instrument of a kind specified in subsection 921L(1) in relation to a relevant provider if … (d) the panel reasonably believes that the relevant provider has contravened a financial services law…”

13. Subsection 921L(1) of the Corporations Act relevantly provides that “[f]or the purposes of subsection 921K(1), the following kinds of instrument are specified: (c) a written order (a registration prohibition order), in relation to a relevant provider, that: (i) cancels all of the relevant provider's registrations … specified in the order; and (ii) provides that the person who is or was the relevant provider is not to be registered … until after a day (the prohibition end day) specified in the order.”

    THE TRIBUNAL’S POWERS ON REVIEW AND RELEVANT PRINCIPLES

14. The role of the Tribunal is prescribed by s 43(1) of the AAT Act. It relevantly provides that, “[f]or the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision”.

15. The relevant key principles regarding the scope of and limitations to the Tribunal’s jurisdiction by virtue of s 43(1) of the AAT Act are well established and relevantly include the following:

    (a)Subsection 43(1) of the AAT Act confers all the powers of the primary decision-maker upon the Tribunal such that the Tribunal may exercise not only the powers upon which the decision-maker relied but also any other relevant power or discretion conferred upon the decision-maker by the enactment.[1]

    (b)The Tribunal is not able to exercise all the powers of the original decision-maker. The power or discretion being exercised by the Tribunal must be relevant to the decision under review.[2]

    (c)The Tribunal must address the same statutory question that the original decision-maker was required to address.[3] Determining whether the same question is being addressed requires careful consideration of the enactment, including identifying the precise question raised by the statute and the “elements of the question necessary to be addressed in reaching a decision”.[4] It is possible to articulate the decision at different levels of generality different consequences for the scope of the review.[5]

    (d)The Tribunal performs the same function as the original decision-maker and is “subject to the same general constraints as the original decision maker”.[6] The Tribunal is obligated to make the “correct and preferable decision”. In doing so, the Tribunal “stand[s] in the shoes of the decision-maker” and determines for itself, on the material before it, the decision it considers should be made, conducting “its own, independent, assessment and determination of the matters”.[7] Moreover, the question is required to be determined on the material before the Tribunal, not on the material as it was when determined by the original decision-maker.[8] In making the correct and preferable decision, the Tribunal usually acts on the basis of the most up-to-date information.[9] This is particularly so if the statutory scheme is for the protection of the public; as with the regulatory regime under the Corporations Act.

    (e)In reviewing the decision, the Tribunal may generally have regard to new or additional material which was not before the original decision-maker; but this may not be permitted if the statute under which the decision was made contains a temporal limitation that operates by reference to a fixed historical point in time, or where the Act directs attention to the position at the time of the Tribunal’s decision.[10]

    [1] Re Control Investment Pty Ltd and Australian Broadcasting Tribunal (No 2) (1981) 3 ALD 88 at 92 (Davies J); Re Brian Lawlor Automotive Pty Ltd and Collector of Customs (New South Wales) (1978) 1 ALD 167 at 175-176; Shi v Migration Agents Registration Authority [2008] HCA 31; 235 CLR 286 (Shi) at [36]-[38] (Kirby J).

    [2] Townshend and Australian Securities and Investments Commission [2023] AATA 3810 at [24].

    [3] Shi at [142] (Kiefel J).

    [4] Frugtniet v Australian Securities and Investments Commission [2019] HCA 16; (2019) 266 CLR 250 (Frugtniet) at [15].

    [5] Secretary, Department of Environment, Energy and Climate Action v Hanson Construction Materials Pty Ltd (2023) 71 VLR 137; [2023] VSC 353.

    [6] Frugtniet at [14] (Kiefel CJ, Keane and Nettle JJ) and Shi [142] (Kiefel J).

    [7] Shi at [141] (Kiefel J).

    [8] Shi at [143] (Kiefel J).

    [9] Shi at [37], [41] and [42] (Kirby J), citing Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24; and Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 at 589 (Bowen CJ and Deane J).

    [10] Shi at [44] (Kirby J), [99], [101] (Hayne and Heydon JJ), [143] (Kiefel J with Crennan J agreeing).

16. Additionally, Mr Rogers emphasised that the Tribunal’s decision-making process is viewed as existing within an “administrative continuum” with the first-instance decision-maker.[11] Therefore, if the Tribunal “strays beyond the boundaries” of its jurisdiction, it will “[disrupt] the continuity of the decision-making process”.[12]

    [11] Frutgniet at [53].

    [12] Schroeder and Australian Securities and Investments Commission [2020] AATA 2453 (Schroeder) at [22] (Thomas J and Deputy President McCabe).

    DOES THE TRIBUNAL HAVE JURISDICTION TO CONSIDER THE ADDITIONAL CLIENT FILES?

17. As stated above at [15], the questions being addressed by the Tribunal on review under s 43(1) of the AAT Act are limited to the powers and discretions that are conferred upon the decision maker by the relevant enactment, being in this case ss 921K(1) and 921L(1) of the Corporations Act.

18. Mr Rogers acknowledged that the Tribunal may sometimes in its review of a decision consider evidence or grounds that were not before the first instance decision-maker. However, he maintained that the Tribunal lacked jurisdiction and authority to do so in the present proceeding. Mr Rogers argued that it is outside the Tribunal’s jurisdiction to have regard to the post-decision allegations and that the Tribunal cannot and should not have regard to the Additional Client Files. Mr Rogers submitted that the Tribunal, on review, should be limited to considering only the factual matters and specific alleged contraventions which were considered by the FSCP, namely, his conduct in relation to the provision of advice to a single client.

19. Mr Rogers also contended that he would be denied procedural fairness because the Additional Client Files had not been the subject of the usual first instance decision-making processes which exist under the Corporations Act.

20. It is noteworthy that Mr Rogers did not contend that ASIC’s reliance on the Additional Client Files was specifically contrary to any of the established principles regarding the Tribunal’s power under s 43(1) of the AAT Act. Instead, the thrust of his arguments was that ASIC’s approach disrupted the “administrative continuum” and, in doing so, it had the effect of denying him procedural fairness because the post-decision allegations had not been previously considered by the decision-maker under the Corporations Act. Additionally, Mr Rogers argued that ASIC had “unilaterally” declared contraventions by him of financial services laws which, not having been made prior to the Reviewable Decision, were beyond the scope of the Tribunal’s jurisdiction to review and determine. According to Mr Rogers, the Tribunal had to confine itself only to the grounds and evidence canvased in the Reviewable Decision and, therefore, was not empowered to consider matters beyond the scope of that decision.

21. The submissions made by Mr Rogers are misconceived for a number of reasons, all of which turn on a misunderstanding as to the Tribunal’s role on merits review. Additionally, his emphasis on the concept of the Tribunal existing within “an administrative continuum” with the first instance decision-maker was also misplaced.

22. First and foremost, Mr Rogers did not suggest that there were any temporal limitations in the Corporations Act that would preclude the Tribunal from exercising its power under s 43(1) of the AAT Act in the general manner set out by the High Court in Shi and in Frugtniet referenced in [15(e)] above. Granted, the relevant ground - s 921K(1)(e) of the Corporations Act - states that an instrument may be made where “the panel reasonably believes that the relevant provider has contravened a financial services law…”. However, ASIC’s reliance on the Additional Client Files does not offend any express temporal limitation and Mr Rogers did not suggest that it did. It is further noted that while Mr Rogers repeatedly referred to the Additional Client Files as the post-decision allegations, they all pre-dated the Reviewable Decision. That is, each of the additional alleged contraventions which comprised the Additional Client Files could have been considered and relied upon by the FSCP, even though it had not done so.

23. ASIC further submitted that the Tribunal’s decision in Callychurn and Australian Securities and Investments Commission [2019] AATA 4600 (Callychurn) was apposite to the preliminary question and supported its position in permitting ASIC to rely on additional grounds and evidence. In Callychurn, the Tribunal was reviewing, on remittal, ASIC’s decision to make a banning order against Ms Callychurnmunder s 80(1) of the National Consumer Credit Protection Act 2009 (Cth) (NCCP Act), analogous in its operation to s 921K of the Corporations Act. ASIC had sought to rely on additional grounds and new evidence to establish that, amongst other things, Ms Callychurn had contravened other provisions of the NCCP Act. Ms Callychurn had challenged the ability of ASIC to rely on the further contraventions which had not been considered or relied upon by the delegate. After reviewing the High Court’s decisions in both Frugtniet and Shi, the Tribunal relevantly concluded at [88] that “…ASIC is entitled to rely on the new evidence put in support of this allegation and the Tribunal is not confined to considering the material that was available to the delegate or before the previous Tribunal…”

24. Secondly, Mr Rogers did not articulate how or why reliance on the Additional Client Files changes the nature of the decision or the question before the original decision-maker. The practical reality is that ASIC is not, by relying on the Additional Client Files, asking the Tribunal to answer a different statutory question than that which was posed to the original decision-maker; nor is ASIC inviting the Tribunal to exercise any unrelated powers or discretions, or powers which were not available to the original decision-maker.  In this regard, ASIC pointed out that its position was coherent with the outcome in Schroeder where the ASIC delegate had banned Mr Schroeder under certain provisions of the Corporations Act and, on review, ASIC sought to also rely on additional statutory grounds. After considering the High Court’s decision in Shi, the Tribunal in Schroeder held at [35] that “… most of the additional grounds that ASIC has identified as being potentially relevant were available to the original decision-maker, even if they were not considered relevant at the time. We do not foresee any difficulty with those grounds forming part of the review process… We are satisfied the nature of the review would not be changed (and the continuity and synchronicity of the review process would not be disrupted) …”.

25. Thirdly, ASIC submitted that the Additional Client Files inform and provide relevant context to the conduct which was, and remains, relied upon by ASIC to enliven the power; namely, the impugned advice given by Mr Rogers. ASIC pointed out that Mr Rogers was quick to suggest in his application for a stay of the Reviewable Decision that his conduct in relation to a single client was a result of the fact that he was, in May 2022, new to his employer, United Global Capital Pty Ltd (UGC), and wasn’t aware at that time of the relationships between UGC and its various related entities. ASIC pointed out, however, that when one has regard to the Additional Client Files, it appears that Mr Rogers had engaged in the same or significantly similar behaviour even later, when he had settled into his role with UGC. In other words, according to ASIC, the Additional Client Files show that the contraventions were not a “once off” error arising from Mr Rogers being new to UGC’s business. Rather, Mr Rogers had “form” as in his conduct was part of an ongoing and deliberate course of conduct, and he should have been aware of the relationships between UGC and the related entities involved. On this basis, ASIC submitted that the Additional Client Files are relevant evidence that ought to be considered by the Tribunal in circumstances where the Tribunal acts on the basis of the most up-to-date information to make the correct or preferable decision as stated in [15(d)] above. The Tribunal agrees with ASIC’s position on the direct relevance of the Additional Client Files.

1. Fourthly, the various arguments put by Mr Rogers in relation to being denied procedural unfairness and generally not being able to obtain merits review, are rejected. In this regard, it is noted that ASIC accepted that the FSCP must not make an instrument unless the relevant provider has been provided with a PAN which sets out certain matters prescribed in s 921P, and that the matters set out in s 921K(2)(a) or (b) apply. Notwithstanding, ASIC correctly argued that there is nothing in the Corporations Act which prohibits the decision-maker, in exercising its discretion, from considering matters which are not set out in the PAN. ASIC explained, and I accept, that as the relevant provider who receives a PAN is given an opportunity to make submissions and those submissions must be taken into account, the FSCP must, if submissions are made, consider matters which are not set out in the PAN. In those circumstances, there is nothing to suggest that the Tribunal on review ought to be confined to consideration of only the factual matters set out in the PAN. A similar issue was considered by the Federal Court and the Full Federal Court in Murdaca v Australian Securities and Investments Commission (Murdaca) and reinforces ASIC’s stance that the PAN is “merely the initial way”.[13] In Murdaca, ASIC had disqualified Mr Murdaca from managing corporations pursuant to s 206F of the Corporations Act. That section relevantly empowers ASIC to disqualify a person where the person has been an officer of two or more corporations which have been wound up in insolvency within the period of 7 years, subject to certain conditions. One of those conditions, set out in s 206F(1)(b), is that the person be given a notice in a prescribed form requiring the recipient of the notice to demonstrate why they should not be disqualified. The notice provided to Mr Murdaca made reference to three corporations which were wound up under his directorship but did not make reference to the failure of a further two additional corporations which were later relied on by ASIC before the Tribunal. The Tribunal on review declined to consider the failure of the additional two corporations. On appeal, Gordon J relevantly held that was an error of law and reasoned at [41], as follows:

   Provided that proper notice and opportunity to be heard are given, the fact that a relevant matter is not stated in the initial s 206F notice will not in itself provide a basis for consideration of that matter to be excluded. That obligation to provide due process is an obligation which exists separately from (though it is not unrelated to) the requirement to issue the notice. A s 206F(1)(b) notice is merely the initial way in which ASIC puts certain of those matters before the person in respect of whom a disqualification order is being considered.

   [13] Australian Securities and Investments Commission v Murdaca [2008] FCA 1399; Murdaca v Australian Securities and Investments Commission [2009] FCAFC 92; (2009) 178 FCR 119.

2. Turning to the separate procedural fairness arguments canvassed by Mr Rogers, ASIC asserted that with respect to the additional factual matters raised by it after the Reviewable Decision, procedural fairness would be afforded to Mr Rogers through the Tribunal’s processes. Those processes include the lodgement of the Additional Client Files as T-Documents and the Tribunal’s statutory obligation under s 39 of the AAT Act to ensure that Mr Rogers is given a reasonable opportunity to present his case. In accordance with the Tribunal’s directions, ASIC had also filed a detailed SFIC before Mr Rogers, which clearly articulated its position in relation to the Additional Client Files and which also proposed the imposition of a higher penalty.

3. ASIC acknowledged that it made assertions that the conduct of Mr Rogers in relation to the Additional Client Files demonstrated further, serious contraventions of financial services laws. However, ASIC submitted that it did not understand why Mr Rogers claimed these assertions were “unilateral” declarations of contraventions which denied him procedural fairness. The Tribunal concurs with ASIC’s submissions. It is the role of the Tribunal to undertake merits review and form its own, independent view based on the evidence and submissions presented to it. The matters in ASIC’s SFIC are “unilateral” only in the sense that they are ASIC’s views. They must and will necessarily be tested by the Tribunal when it undertakes merits review of the Reviewable Decision and hears all the evidence and submissions.

4. The preliminary question regarding the Tribunal’s jurisdiction to consider the Additional Client Files involves an orthodox application of the relevant key principles outlined at [15] above, all of which are based on authorities that the Tribunal is bound to apply. Moreover, the acceptance of the Tribunal existing within “an administrative continuum” with the first-instance decision-maker is not inconsistent with the paramount role and power of the Tribunal under s 43 of the AAT Act to undertake merits review.

   DECISION

5. The Tribunal has jurisdiction to consider and review the Additional Client Files referred to and included by ASIC in the T-Documents in undertaking the review of the Reviewable Decision.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for the decision herein of Deputy President G Lazanas

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Associate

Dated: 30 July 2024

Date(s) of hearing:	Hearing on the papers
Date final submissions received:	17 June 2024
Solicitors for the Applicant:	Applicant self-represented
Counsel for the Respondent:	Ms F J Bentley
Solicitors for the Respondent:	Mr R Chiarella, Australian Securities and Investments Commission