Rothnie and Australian Securities and Investments Commission
[2020] AATA 373
•28 February 2020
Rothnie and Australian Securities and Investments Commission [2020] AATA 373 (28 February 2020)
Division:TAXATION & COMMERCIAL DIVISION
File Number(s): 2019/4633
Re:Mark Alexander Rothnie
APPLICANT
AndAustralian Securities and Investments Commission
RESPONDENT
DECISION
Tribunal:Member D K Grigg
Date:28 February 2020
Place:Brisbane
The Tribunal:
1.authorises the issue of a summons to the Applicant to produce the following:
Any documents or things (whether electronic or hard copy) which record or were used in the provision of financial product advice and any other financial services to the following clients, or formed part of the client file retained by the applicant in relation to the following clients:
1. Dr Christopher Allen-Waters;
2. Dr Ben Nguyen;
3. Christopher and Joan Erbacher;
4. Carol and Adam Selwood;
5. Pramil Masih; and
6. Dr Bruno Lim and Dr Ammu Ruby.
2.directs that the Respondent deliver any expert report on which it intends to rely to the Applicant and the Tribunal within 30 days of inspection of the documents, if any, produced in accordance with the summons.
..............[sgd].........................
Member D K Grigg
CATCHWORDS
PRACTICE AND PROCEDURE – SUMMONS – whether documents sought are relevant to the issues to be decided – whether a summons can be issued to a party to the proceedings – summons allowed.
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth)
Australian Securities and Investments Commission Act 2001 (Cth)
Corporations Act 2001 (Cth)
CASES
Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98
Caltex Refining Co Pty Limited and Caltex Oil (Australia) Pty Limited v Amalgamated Metal Workers Union and Ors [1990] FCA 483
Comcare v Maganga [2008] FCA 285; (2008) 101 ALD 68
Cosco Holdings Pty Ltd v Commissioner for Taxation & Anor [1997] FCA 1504; (1997) 37 ATR 432
Hunt v Wark (1985) 40 SASR 489
Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577; (1979) 2 ALD 60
Radge and Commissioner of Taxation [2007] AATA 1317; (2007) 95 ALD 711
RKTF and Australian Securities & Investments Commission [2019] AATA 4546
Sand Goanna Institute Pty Ltd and Australian Skills Quality Authority [2018] AATA 981
Trade Practices Commission v Arnotts Ltd and Others (1989) 21 FCR 306; (1989) 88 ALR 90
Treasurer of the Commonwealth of Australia v Canwest Global Communications Corp and Others [1997] FCA 578
VBN And Anor and Australian Prudential Regulation Authority and Anor [2005] AATA 1060; (2005) 92 ALD 455
SECONDARY MATERIALS
Administrative Appeals Tribunal Guideline to Persons Giving Expert and Opinion Evidence (30 June 2015)
REASONS FOR DECISION
Member D K Grigg
28 February 2020
BACKGROUND
The Applicant, Mark Rothnie, has been a financial advisor for more than 15 years.[1] At all relevant times:
(a)Mr Rothnie operated his own advisory firm, Rothnie Financial Security Pty Ltd, as sole director and sole shareholder;
(b)Mr Rothnie and Rothnie Financial Security Pty Ltd were authorised representatives of GPS Wealth Ltd (“GPS Wealth”), an Australian Financial Services Licensee.[2]
[1] Respondent’s Statement of Facts, Issues and Contentions, [7].
[2] Reasons for Decision of ASIC Delegate dated 29 July 2019 (“Reasons of Delegate”), [1] and [2].
In 2017 the Australian Securities and Investment Commission (“ASIC”) commenced a surveillance operation of Mr Rothnie.
Pursuant to section 33 of the Australian Securities and Investments Commission Act 2001 (Cth) (“ASIC Act”) ASIC has the power to serve a notice on a person to produce documents in that person's possession. A failure to comply with such a notice is an offence.
As part of the surveillance of Mr Rothnie, ASIC served two section 33 notices on GPS Wealth, dated 20 March 2017 and 3 November 2017, requiring it to produce files relating to nine of Mr Rothnie’s clients (“Section 33 Notices”).[3]
[3] Affidavit of Mr Walker filed 30 January 2020 (“Walker Affidavit”), [4] and attachments 1 and 2.
The Section 33 Notices required GPS Wealth to produce “the entire client file” of the following clients that had been serviced by Mr Rothnie (collectively “the Clients”):
·Pramil Marsh
·Carol and Adam Selwood
·Christopher and Joan Erbacher
·Dr Christopher Allen-Waters
·Dr Ben Nguyen
·Dr Bruno Lim and Dr Ammu Ruby
It was ASIC’s understanding, until recently, that the documents produced by GPS Wealth in compliance with the Section 33 Notices, constituted the entirety of the Clients’ files.[4]
[4] Walker Affidavit, [13]-[14].
Upon completion of its audit of the requested material obtained from GPS Wealth, ASIC conducted a hearing with Mr Rothnie on 14 November 2018. Following the hearing an ASIC delegate made a banning order under section 920A of the Corporations Act 2001 (Cth) (“Corporations Act”), prohibiting Mr Rothnie from providing any financial services for a period of three years.[5]
[5] Reasons of Delegate, [7].
The ASIC delegate decided that the banning order should be made because (see sections 920A(1)(e) and (f), Corporations Act):[6]
[6] Reasons of Delegate, pages 3 – 14.
(a)Mr Rothnie had failed to comply with financial services law (see section 961B, Corporations Act) by failing to act in the best interests of the following clients:
(i)Dr Waters;
(ii)Joan Erbacher; and
(iii)Pramil Masih;
(b)Mr Rothnie had failed to provide appropriate advice (see section 961G, Corporations Act) to the following clients:
(i)Pramil Masih;
(ii)Adam Selwood; and
(c)based on Mr Rothnie’s past conduct, he was likely to contravene a financial services law.
In her decision, the ASIC delegate explained that:[7]
(a)she “selected a number of clients to illustrate why [she] consider[s] [Mr Rothnie’s] conduct demonstrates that he has not complied with his obligations under financial services laws”; and
(b)she did not need to determine whether Mr Rothnie had failed to provide appropriate advice, or acted in the best interests, in relation to all of the Clients in forming the view that a banning order should be made.
[7] Reasons of Delegate, [13].
On 31 July 2019 Mr Rothnie applied to the Tribunal for a review of ASIC’s decision. Mr Rothnie also sought stay and confidentiality orders. The applications for a stay and confidentiality order were dismissed by the Tribunal on 23 October 2019.[8]
[8] RKTF and Australian Securities & Investments Commission [2019] AATA 4546.
On 20 December 2019, ASIC wrote to Mr Rothnie’s solicitors requesting confirmation by 10 January 2020 that Mr Rothnie had produced the entirety of the Clients’ files.[9]
[9] Respondent’s Submissions dated 5 February 2020 (“Respondent’s Submissions”), [15].
On 6 January 2020, ASIC wrote to Mr Rothnie’s solicitor advising that ASIC’s expert witness had identified documents that appeared to be missing from the Clients’ files and that he required those documents in order to finalise his evaluation and report. ASIC informed Mr Rothnie’s solicitors that if no response to their letters was received by 10 January 2020, it would request the Tribunal to issue a summons for those documents. ASIC then agreed to delay making the summons request until 17 January 2020.[10]
[10] Respondent’s Submissions, [16].
On 17 January 2020, having received no confirmation as to whether Mr Rothnie had already produced the entire files of the Clients, ASIC filed a summons request with the Tribunal.
ASIC requests that a summons be issued directing Mr Rothnie to produce the following documents (“Draft Summons”):
Any documents or things (whether electronic or hard copy) not previously produced to ASIC which record or were used in the provision of financial product advice and any other financial services to the following clients, or formed part of the client file retained by the applicant in relation to the following clients:
1. Dr Christopher Allen-Waters;
2. Dr Ben Nguyen;
3. Christopher and Joan Erbacher;
4. Carol and Adam Selwood;
5. Pramil Masih; and
6. Dr Bruno Lim and Dr Ammu Ruby.
Those documents or things including but not being limited to:
1. Copies of insurance application forms, including quotations for new products being implemented;
2. Acknowledgements of receipt of the application forms from the client’s new insurer;
3. Requests from the client’s new insurer for further information or medical tests;
4. Updates from the client’s new insurer on the progress of the application in the underwriting process;
5. Written notifications from the client’s new insurer of acceptance or an offer of revised terms;
6. If revised terms were offered, any file notes or other communications recording how this was disclosed to and discussed with the client and the outcome of that discussion;
7. Cancellation letters and a copy of the confirmation from the client’s former insurer that cover has been cancelled; and
8. Any file notes or other communications to and from Mr Rothnie's staff members who were administering the process
Mr Rothnie opposes the issue of the summons.
PARTIES CONTENTIONS
Mr Rothnie objects to the issue of the summons on the grounds that:[11]
(a)a summons for the production of documents should not be issued to an applicant in a review proceeding pursuant to section 40A of the Administrative Appeals Tribunal Act 1975 (Cth) (“AAT Act”);
(b)the summons is vague and oppressive;
(c)the summons amounts to a fishing expedition; and
(d)it is contrary to the Tribunal’s objectives for ASIC to embark upon a further investigation, where ASIC’s own forensic decisions have already caused substantial delay.
[11] Applicant’s Submissions dated 5 February 2020 (“Applicant’s Submissions”), [4].
Mr Rothnie notes that the Tribunal has a directions power under section 33 of the AAT Act that enables the Tribunal to direct that a party produce documents. However, Mr Rothnie contends that section 33 does not contemplate any broad production of documents, and the production sought by ASIC would not further the Tribunal’s statutory objectives in section 2A, or the procedural objectives set out in section 33(1)(b) of the AAT Act.[12]
[12] Applicant’s Submissions, [4].
ASIC contends that:[13]
(a)a summons can be issued against a party to a proceeding under section 40A, and/or, alternatively, the Tribunal has a discretion under section 33 of the AAT Act to direct that Mr Rothnie produce the documents ASIC requests;
(b)the documents sought are relevant to the Tribunal’s review;
(c)the summons does not amount to a “fishing” expedition because the documents requested have been identified by ASIC’s intended expert witness for the final hearing, as relevant to the formation of his opinion on Mr Rothnie’s conduct;
(d)the summons is not oppressive;
(e)the documents should already have been produced at the time the Section 33 Notices were issued, and the failure to produce them at that time has not been explained by Mr Rothnie;
(f)it has only become aware, as a result of the process of the preparation of expert reports, that there are documents apparently missing from the Clients’ files; and
(g)the Tribunal, and the parties, should have all relevant documents before them for the purpose of the final hearing.
[13] Respondent’s Submissions, [2] and [4].
POWERS AND OBJECTIVES OF THE TRIBUNAL
The Tribunal is under a statutory obligation pursuant to section 2A of the AAT Act to:
…pursue the objective of providing a mechanism of review that:
(a) is accessible; and
(b) is fair, just, economical, informal and quick; and
(c) is proportionate to the importance and complexity of the matter; and
(d) promotes public trust and confidence in the decision-making of the Tribunal
The power of the Tribunal to issue a summons is derived from section 40(A) of the AAT Act which provides relevantly that:
(1) For the purposes of a proceeding before the Tribunal, … an authorised member … may summon a person to do either or both of the following, on the day, and at the time and place, specified in the summons:
(a) …;
(b) produce any document or other thing specified in the summons.
(emphasis added)
The Tribunal’s directions power is set out in section 33 of the AAT Act. Section 33(2A)(a) provides that the Tribunal may “require any person who is a party to the proceeding to provide further information in relation to the proceeding”.
Issuance of a Summons – General Principles
It is not controversial that the summons power will only be exercised in relation to documents that are relevant to the issues in the proceeding before the Tribunal.
A summons “will be an abuse of process if it is not used for a legitimate forensic purpose”.[14]
[14] Trade Practices v Arnotts Limited and Others (1989) 21 FCR 306; (1989) 88 ALR 90 citing Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98, 100–1.
Bennett J has described the test to assess whether a summons should be issued as whether there “is a real possibility that [the documents sought] may assist in the resolution of issues in the proceedings”.[15]
[15] Comcare v Maganga [2008] FCA 285; (2008) 101 ALD 68, [37].
In Hunt v Wark (1985) 40 SASR 489 (at 493) King CJ said:
A summons to witness to produce documents cannot be used for purposes of mere “fishing”. There must be some reason to suppose that the documents sought will be capable of being used as evidence…
It is not necessary to construe those words with undue strictness so as to refer only to documents which are admissible evidence. The words are wide enough to include documents reasonably needed for the cross-examination of a witness ... whether or not they would ultimately be used in evidence to contradict the witness.
(emphasis added)
In VBN And Anor Australian Prudential Regulation Authority and Anor [2005] AATA 1060; (2005) 92 ALD 455 (“VBN”) Deputy President Forgie explained that:
[31] Given the nature of merits review by the Tribunal, documents that are relevant …must be documents that are connected with or pertinent to the multi-faceted task, or a part of it, that the Tribunal must undertake.
(emphasis added)
In Trade Practices Commission v Arnotts Ltd and Others (1989) 21 FCR 306; (1989) 88 ALR 90 (“Arnotts”), Beaumont J asked (in the analogous context of subpoenas) the following questions:[16]
(1) Does the material sought have an apparent relevance to the issues in the principal proceedings, ie, is adjectival, as distinct from substantive, relevance established? Does the subpoena have a legitimate forensic purpose to this extent? This involves a consideration of the matter from the standpoint of Arnotts.
(2) Is the subpoena seriously and unfairly burdensome or prejudicial?.
[16] Quoted by Spender J in Cosco Holdings Pty Ltd v Commissioner for Taxation & Anor [1997] FCA 1504; (1997) 37 ATR 432, 439.
In Cosco Holdings Pty Ltd v Commissioner for Taxation & Anor [1997] FCA 1504; (1997) 37 ATR 432 (“Cosco”) Spender J (at 439) referred to Arnotts, where Beaumont J had said:
The test of adjectival relevance is satisfied if the material has apparent relevance. In my opinion, the documentation called for here could possibly throw light on the issues in the main case. In my opinion, adjectival relevance is established.
(emphasis added)
Spender J (at 439) explained how he interpreted that passage from Beaumont J’s judgment in Arnotts as follows:
Notwithstanding the use of the word “possibly” in this paragraph, in my opinion, that word is not used in any speculative sense. I take his Honour’s conclusion expressed in that paragraph as an acquiescence to the correctness of the submission that the material sought could reasonably be expected to throw light on some of the issues in the principal proceedings. It is not a question of looking at the documents to see if the documents might permit a case to be made.
In Caltex Refining Co Pty Limited and Caltex Oil (Australia) Pty Limited v Amalgamated Metal Workers Union and Ors [1990] FCA 483 Burchett J said (with the agreement of Lockhart and Gummow JJ):[17]
Discovery should be controlled, and may be limited to documents relevant to particular issues, but it is a valuable weapon in the armoury of justice. The real objection which, in some cases, justifies discovery being limited to particular issues is the objection of oppression.
(emphasis added)
[17] Quoted by Spender J in Cosco Holdings Pty Ltd v Commissioner for Taxation & Anor [1997] FCA 1504; (1997) 37 ATR 432, 440. See Treasurer of the Commonwealth of Australia v Canwest Global Communications Corp and Others [1997] FCA 578.
In Treasurer of the Commonwealth of Australia v Canwest Global Communications Corp and Others [1997] FCA 578 (“Canwest”), their Honours said:
A modern statement of the principle which has been repeatedly followed is that made by Brennan J (with whom Bowen CJ agreed) in W.A. Pynes Pty Ltd v Bannerman (1980) 41 FLR 175 at 181, where what is required to obtain a discovery order in a doubtful case was expressed as follows:
sufficient is shown to ground a suspicion that the party applying for discovery has a good case proof of which is likely to be aided by discovery.
(emphasis added)
Spender J also referred in Cosco (at 440) to Canwest where Beaumont, Burchett and Emmett JJ said of the meaning of “fishing”:
The objection encapsulated in a metaphoric expression "fishing" has been understood as a good ground to deny an order for discovery for a very long time. It was stated in Bray on Discovery (1885) at 16:
Discovery is given in courts of equity to assist a plaintiff in proving a known case, and not to assist him in a mere roving speculation, the object of which is to see whether he can fish out a case.
In Comcare v Maganga [2008] FCA 285; (2008) 101 ALD 68 (“Maganga”) Bennett J reiterated (at [38]), that the test of relevance was one of “apparent relevance” given the subject matter of the dispute.
CONSIDERATION
The parties made oral submissions to the Tribunal at a hearing on 30 January 2020. Further time was required for the parties to present their full submissions so the Tribunal directed the parties to file written submissions. The Tribunal received the parties’ written submissions on 5 February 2020.
Can a summons for production of documents be issued to an applicant in a review proceeding?
Mr Rothnie submits that the issue of a summons to produce documents directed to himself is not an appropriate use of the Tribunal’s power under s 40A of the AAT Act. Mr Peckham, Mr Rothnie’s Counsel, referred the Tribunal to the decision of Deputy President Forgie in Radge & Commissioner of Taxation [2007] AATA 1317; (2007) 95 ALD 711 (“Radge”) where she:
[78] Finally, I would observe that, generally, I do not consider it appropriate to use the Tribunals’ power to summons documents to obtain documents from the parties themselves. It is a power that should generally be reserved to obtain documents from third parties. The documents will then be available to both parties as well as to the Tribunal. In the case of the decision-maker, relevant documents will generally be produced under s 37 of the AAT Act. If they are not or if it later appears that there are other documents that may be relevant to the review, the Tribunal has power to order their production under s 37(2). That section has effect notwithstanding any rule of law relating to privilege or the public interest in relation to the production of documents, and so is a more extensive power than that available to the Tribunal under the summons power. In the case of a party who is not the decision-maker, there should also be a reluctance to issue a summons. The directions power is sufficient to require production of relevant documents by the parties.
Mr Rothnie argues that Deputy President Forgie’s comments in relation to the issuance of a summons against a party should be followed here. Further, Mr Rothnie contends that the directions power set out in section 33 of the AAT Act, does not give the Tribunal the power to require the production of the documents sought by ASIC.[18]
[18] Applicant’s Submissions, [7]-[17].
While Deputy President Forgie referred to there being a reluctance to issue a summons in the case of a party to a proceeding before the Tribunal, there is no statutory prohibition on doing so. Section 40A of the AAT Act provides that the Tribunal may summon “a person”. It does not say, “a person that it is not a party to the proceeding”. If the legislature had intended this power to not apply to parties it could have made that clear (as it has made clear that the directions power is limited to directions being made against parties to proceedings only). Instead Parliament has decided to grant the Tribunal a broader power.
Although Deputy President Forgie suggested that general practice of the Tribunal is to not issue a summons against a party, she does not elaborate on when, in her view, an exception to the general practice could or should be made.
The Tribunal knows of no reason why Mr Rothnie could not be summonsed to produce documents under section 40A of the AAT Act.
Can the directions power under section 33 of the Administrative Appeals Tribunal Act 1975 (Cth) (“AAT Act”), be used to require a party to produce documents?
As the Tribunal has determined that the summons power provided for in section 40A of the AAT Act can be issued against a party to a proceeding, there is no need to consider in this matter the alternative argument regarding whether the directions power under section 33 of the AAT Act be used to require a party to produce documents.
However, the Tribunal is of the view that the directions power in section 33(2A) is broad enough to encompass a direction for a party to produce documents of the nature sought by ASIC. In Radge, Deputy President Forgie also commented that “the directions power is sufficient to require production of relevant documents by the parties”.[19]
[19] [2007] AATA 1317; (2007) 95 ALD 711, [78].
If the Tribunal is incorrect in relation to the summons power, the Tribunal would, for the reasons set out below, have made a direction to produce the requested documents.
Is the requested summons vague and oppressive?
Mr Rothnie contends that the scope of the summons “is unhelpfully broad and vague”.[20]
[20] Applicant’s Submissions, [18].
The Tribunal finds that clause 1 of the Draft Summons is quite clear - all documents which formed part of Mr Rothnie’s Clients’ files are to be produced.
The only potential vagueness is the inclusion of the words “not previously produced to ASIC”.
The second clause of the Draft Summons is, strictly speaking, unnecessary and was simply inserted by ASIC in order to identify for Mr Rothnie documents ASIC’s expert expected would have already been in the discovered Clients’ files. The Tribunal is not persuaded that this description is confusing. If the types of documents described in clause 2 do not exist, they will not be produced. If clause 2 does cause any confusion, it can be deleted. Deleting clause 2 alters nothing in terms of what Mr Rothnie has to produce.
Mr Rothnie says the Draft Summons is oppressive because for each of the nine clients he will have to:[21]
(a)identify what documents are in the client file;
(b)identify whether there are any additional documents that should have been retained in the client file, but were not;
(c)identify any other documents that were used in the provision of advice;
(d)identify whether any of the documents falling within categories (a), (b) and (c) were not previously provided to ASIC by GPS Wealth Ltd; and
(e)then produce only those documents not previously provided.
[21] Applicant’s Submissions, [21].
The Tribunal does not understand the basis for this submission in circumstances where:
(a)all documents in the Client’s file have to be produced;
(b)if some documents are not retained in the file that were there originally, this would no doubt form part of Mr Rothnie’s evidence at the hearing. It has no impact on Mr Rothnie’s compliance with the summons. Surely the task of determining whether there are any additional documents that should have been retained in the client file is one which Mr Rothnie would already be engaging in as part of his preparation for the hearing, irrespective of whether the summons was issued.
(c)Mr Rothnie says he assisted GPS Wealth with its production of documents to ASIC in good faith and therefore would have direct knowledge of what was produced; and
(d)given that Mr Rothnie has instructed Counsel that he is not aware that there are any remaining documents to produce, it would appear that complying with the summons will not be oppressive.
Any burden in relation to a cross-referencing exercise of what GPS Wealth has also produced can be overcome by amending the summons by deleting the words “not previously produced to ASIC”.
Does the requested the summons amount to a “fishing” expedition?
Mr Rothnie submits that the summons amounts to a fishing expedition and that:[22]
ASIC is casting a net, in the hope that it may return something of value, that it is presently unable to describe.
[22] Applicant’s Submissions, [25].
The Tribunal does not interpret the Draft Summons in that light.
Counsel for ASIC explained:[23]
As part of the preparation of his expert report, the expert has identified particular documents that he would have expected to be present in the applicant’s client files but which have not been provided. It is possible that there are no such documents, in which case the Applicant should be readily able to state that. If there are such documents, the expert has requested that he have them as part of preparing his opinion.
ASIC has sought from the Applicant a copy of the complete client files of the identified clients, including certain identified documents.
[23] Respondent’s Submissions, [40]-[41].
Mr Brady QC, Counsel for ASIC, has clearly identified that the summons request arises from the concerns of ASIC’s expert. The expert’s identification that some documents may be missing also causes concern for the Tribunal that it may not have all of the relevant material before it. If it remains unclear whether the entire Client files have been produced, the expert may have to inform the Tribunal that his/her report is incomplete (as per the requirement in paragraph 4.3 of the AAT’s Guideline to Persons Giving Expert and Opinion Evidence).
This matter will ultimately involve the Tribunal considering Mr Rothnie’s conduct in relation to nine specified clients. They are the same nine clients dealt with before the ASIC delegate. The documents ASIC seek have “apparent relevance” to the issues before the Tribunal. ASIC asked Mr Rothnie to confirm there was no additional material on the Clients’ files. Mr Rothnie has not provided a definitive answer.[24]
[24] Respondent’s Submissions, [15]-[17]; Walker Affidavit, [16].
Given the expert’s query, it is clear that the documents requested, may “throw some light” on whether Mr Rothnie acted in the best interests of the Clients.
Further, section 961B of the Corporations Act requires that a financial services provider “prove” they have followed a particular process in order to satisfy section 961B(1) that they have acted in the best interest of the client. It follows that documents or records evidencing the process taken by Mr Rothnie in relation to the Clients are relevant to the application before the Tribunal. The process taken by Mr Rothnie, based on the information available to the ASIC delegate gave rise to a finding that Mr Rothnie is likely to contravene a financial services law.[25] Any documents that address this issue are surely relevant to whether this decision was the correct and preferable decision.
[25] Reasons of Delegate, [87].
Mr Peckham said “ASIC is seeking the production of documents in the context of a radical expansion of its case beyond the findings that were made by the original decision maker in the decision that’s actually under review”.[26]
[26] Transcript 30 January 2020, page 13.
This a reference to the fact that the delegate decided she did not need to go into every alleged contravention in order to determine that a banning order should be imposed. All of the Clients were referred to in the decision and that makes their files relevant.
It matters not whether any additional documents produced as a result of the summons were before the delegate. Bowen CJ and Deane J in Drake v Minister for Immigration and Ethnic Affairs (1997) 24 ALR 577; (1979) 2 ALD 60 (at 68) clearly identified the role of the Tribunal as distinct from that of a court:
The function of the Tribunal is ... an administrative one. It is to review the administrative decision that is under attack before it. In that review, the Tribunal is not restricted to consideration of the questions which are relevant to a judicial determination of whether a discretionary power allowed by statute has been validly exercised. Except in a case where only one decision can lawfully be made, it is not ordinarily part of the function of a court either to determine what decision should be made in the exercise of an administrative decision in a given case or, where a decision has been lawfully made in pursuance of permissible policy, to adjudicate upon the merits of the decision or the propriety of the policy. That is primarily an administrative rather than a judicial function. It is the function which has been entrusted to the Tribunal.
The question for the determination of the Tribunal is not whether the decision which the decision-maker made was the correct or preferable one on the material before him. The question for the determination of the Tribunal is whether that decision was the correct or preferable one on the material before the Tribunal. The Act offers little general guidance on the criteria and rules which the Tribunal is to apply in the performance of its task of reviewing administrative decisions which are subjected to its surveillance.
(emphasis added)
At the hearing I had interpreted Mr Peckham as submitting the Tribunal would not have jursidiction to consider any potential breach other than the examples considered by the ASIC delegate. However Mr Peckham assured me that his objection to the summons was not on the basis that the Tribunal lacks jurisdiction to consider those issues, but rather that it would not be “fair, just, economical or quick” in accordance with the Tribunal’s objectives. Procedural fairness needs to be granted to both parties. Each party must have a reasonable opportunity to present its case. As Bennett J explained in Maganga (at [39]):
The requirement to accord procedural fairness includes a requirement to allow a party to test the evidence of a witness. While cross-examination to test the credit of a witness where that credit is not in issue may be excluded (Fried), credit was the main issue in these proceedings. The summonsed documents were, prima facie, relevant to the proceedings. There was a reasonable possibility that they could have assisted in the resolution of issues in the proceedings.
(emphasis added)
Would the issue of the requested summons be contrary to the Tribunal’s statutory objectives in s 2A, or the procedural objectives set out in section 33(1)(b) of the AAT Act?
Mr Rothnie contends that “ASIC’s forensic decisions have caused substantial delay, which has prejudiced Mr Rothnie.[27]
[27] Applicant’s Submissions, [27].
If there has been a delay in the request for documents it is only because ASIC’s expert witness has only recently identified that the Clients’ files appear to be incomplete.
Mr Peckham referred to ASIC having previously restricted the scope of its case. I do not consider this to be an entirely accurate portrayal of the situation.[28] At the hearing before the delegate, ASIC contended breaches by Mr Rothnie in relation to all of the Clients. Mr Rothnie would be fully aware of those contentions as were his representatives at the hearing. The delegate said she had regard to all of the material presented by ASIC but simply chose to provide only a few examples of the conduct she found to be in breach.
[28] Applicant’s Submissions, [27].
If Mr Rothnie wishes to contend that the jurisdiction of the Tribunal is limited to a consideration of the circumstances/documents specifically addressed by the delegate, objections can be made to the introduction of any specific evidence at the final hearing.
I note that Mr Peckham assured the Tribunal this objection to the summons was not made on the basis that the Tribunal lacks jurisdiction. The Tribunal finds this ground has no merit.
Is there a material forensic purpose to the summons that would assist the Tribunal in achieving its objectives (including fairness and expedition)?
Mr Rothnie contends that ASIC has not been able to articulate specifically which documents are sought, or why.[29] Yet some of the specific documents sought are set out in clause 2 of the draft summons. ASIC has also explained why it is seeking those documents. It is of no matter that the documents were not relied on by the delegate in making her original findings.
[29] Applicant’s Submissions, [36].
The issue under review is whether Mr Rothnie has acted in breach of sections 961B and 961G of the Corporations Act in relation to the Clients. The contents of the Clients’ file are relevant to those issues. The Tribunal does not consider that the request is speculative. It is clear that whether any documents are, or are not, produced will be informative.
Mr Peckham refered to Sand Goanna Institute and Australian Skills Quality Authority [2018] AATA 981 (“Sand Goanna”), where Senior Member Illingworth refused to issue a summons by which the decision-maker (ASQA) sought to require the production of documents by the Applicant (a registered training organisation).
Whether the documents were relevant in Sand Goanna does not assist this Tribunal. Further, as already set out, the Tribunal is entitled to consider the issues based on new material. The issue remains as to whether Mr Rothnie should be banned for failing to act in the best interests of the Clients. The documents in the Client files, logically, not speculatively, may assist the Tribunal in its determination.
As Bennett J noted in Maganga that:
[29]…If a denial of procedural fairness can be shown, a court should not refuse relief unless it is confident that the breach could not have affected the outcome (Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57; (2000) 204 CLR 82 at [104] per McHugh J, citing Stead v State Government Insurance Commission (1986) [1986] HCA 54; 161 CLR 141 at 145). In this case, it cannot be shown that the Tribunal’s decision not to allow Comcare access to the summonsed documents did not ultimately affect the outcome of the decision.
(emphasis added)
There is a real likelihood that the documents, the subject of the summons, may affect the outcome of the proceeding.
Mr Rothnie says:[30]
In this case, the documents sought do not form part of the basis for the decision that ASIC is seeking to justify, because they were never in ASIC’s possession.
[30] Applicant’s Submissions, [41].
Again, this argument is irrelevant here.
In written submissions Mr Peckham acknowledged that:[31]
It is not submitted that those documents would be necessarily irrelevant to the question in the proceeding (that is, whether or not Mr Rothnie should be banned from providing financial services). It is accepted that the Tribunal would be entitled to new material, if it was produced.
(emphasis added)
[31] Applicant’s Submissions, [42].
Given Mr Rothnie’s instructions (see paragraph 48 above), the Tribunal is unconvinced that the summons would cause “disproportionate expense and delay”[32] and detract from the Tribunal’s statutory objectives.
[32] Applicant’s Submissions, [43].
CONCLUSION
For the reasons outlined above the Tribunal finds that the documents sought in the summons do have adjectival relevance to the issues before the Tribunal.
DECISION
The Tribunal authorises the issue of a summons against Mr Rothnie.
The draft summons will be amended to read:
Any documents or things (whether electronic or hard copy) which record or were used in the provision of financial product advice and any other financial services to the following clients, or formed part of the client file retained by the applicant in relation to the following clients:
1.Dr Christopher Allen-Waters;
2. Dr Ben Nguyen;
3. Christopher and Joan Erbacher;
4. Carol and Adam Selwood;
5. Pramil Masih; and
6. Dr Bruno Lim and Dr Ammu Ruby.
I certify that the preceding 78 (seventy-eight) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg
..............................[sgd]..........................................
Associate
Dated: 28 February 2020
Date reserved:
5 February 2020
Counsel for the Applicant:
Mr Matthew Peckham
Solicitors for the Applicant: Cameron McCormack, Lawyer
K&L GatesCounsel for the Respondent:
Mr Matthew Brady QC
Solicitors for the Respondent:
Mr James Walker, Senior Lawyer, Administrative Law Team, Australian Securities and Investment Commission
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