Sleiman and Australian Securities Investments Commission
[2007] AATA 1383
•29 May 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1383
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2006/1260
GENERAL ADMINISTRATIVE DIVISION ) Re JOSEPH SLEIMAN Applicant
And
AUSTRALIAN SECURITIES INVESTMENTS COMMISSION
Respondent
DECISION
Tribunal Mr P W Taylor SC, Senior Member Date29 May 2007
PlaceSydney
Decision 1. The Tribunal’s answers to the first three questions posed for separate determination are as follows
1.1 Mr Sleiman is suffering from a psychotic illness, paranoid schizophrenia, As a result of that illness
(i) Mr Sleiman is not incapable of managing his affairs
(ii) Mr Sleiman is not a fit and proper person to remain registered as a liquidator.
1.2 Mr Sleiman is suffering from a psychotic illness, paranoid schizophrenia, that is likely to impede materially his ability to participate effectively in the conduct of the review proceedings.
1.3 Mr Sleiman is suffering from a psychotic disease, paranoid schizophrenia, that is likely to be exacerbated or prolonged by the conduct of the review proceedings. This is especially likely if the review proceedings include all of the matters relied on in ASIC’s Amended Statement of Facts and Contentions and are conducted by way of a continuous hearing involving all those matters.
2. Once the parties have had an opportunity to consider the Tribunal’s answers to the separate questions they should have the review proceedings listed for further directions in relation to their further hearing.
.............[sgd]...........
Mr P W Taylor SC
Senior Member
CATCHWORDS
CORPORATIONS LAW – psychotic illness – not a fit and proper person to remain registered as a liquidator – ability to manage affairs – ability to participate effectively in the conduct of proceedings – whether illness exacerbated or prolonged by proceedings – relevance of illness to past conduct
LEGISLATION
Corporations Act 2001 section 1292
Administrative Appeals Tribunal Act 1975
CASE LAW
Farley and Australian Securities Investments Commission (1998) 16 ACLC 1502 [1998] AATA 495
Re Wharton and Australian Securities and Investments Commission (2002) 69 ALD 419
Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
Davies v Australian Securities Commission (1995) 59 FCR 221
Rich v Australian Securities and Investments Commission (2004) 220 CLR 129; (2004) 209 ALR 271; [2004] HCA 42
Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 655
Hughes and Vale Pty Ltd v NSW [No] (1955) 93 CLR 127
Clyne v New South Wales Bar Association (1960) 104 CLR 186
New South Wales Bar Association v Evatt (1968) 117 CLR 177
Smith v New South Wales Bar Association (1992) 176 CLR 256
Wentworth v New South Wales Bar Association (1992) 176 CLR 239
Health Care Complaints Commission v Lichfield (1997) 41 NSWLR 630
Health Care Complaints Commission v Abou Hatoum and Anor [2004] NSWCA 30
Dahia v Tax Agents’ Board of Victoria (1997) 36 ATR 1124
Toohey v Tax Agents’ Board of Victoria [2007] FCA 431.
Re Su and the Tax Agents’ Board of South Australia (1982) 82 ATC 4282
Albarran v Members of the Companies Auditors and Liquidators Disciplinary Board [2006] FCAFC 69; (2006) 151 FCR 466; (2006) 233 ALR 37; (2006) 59 ACSR 129; (2006) 24 ACLC 619
Re Wolstonecroft and Companies Auditors and Liquidators Disciplinary Board (1998) 54 ALD 773
Southern Law Society v Westbrook (1910) 10 CLR 609
Law Society (NSW) v Foreman (1994) 34 NSWLR 408
Pillai v Messiter (No 2) (1989) 16 NSWLR 197
Law Society (NSW) of New South Wales v Moulton [1981] 2 NSWLR 736
Newbury v Dental Board of Victoria [2000] VSC 54.
Rich v Australian Securities and Investments Commission (2004) 220 CLR 129; (2004) 209 ALR 271
Australian Securities and Investments Commission v Hutchings (2001) 38 ACSR 387
Health Care Complaints Commission v Lichfield (1997) 41 NSWLR 630
Wall and Civil Aviation Safety Authority (1998) 28 ALD 154
Re Biposto; Condon v Rogers (1995) 17 ACSR 730
Re Allebart Pty Lt; Re Home Holdings Pty Ltd [1971) 1 NSWLR 24
Advance Housing Pty Ltd (in liq) v Newcastle Classic Developments Pty Ltd (1994) 14 ACSR 230
Re Giant Resources Ltd [1991] 1 Qd R 107
Re B (a solicitor) [1986] VR 695F
Lofthouse v Australian Securities and Investments Commission (2004) 82 ALD 481; (2004) 22 ACLC 685; [2004] AATA 327
REASONS FOR DECISION
29 May 2007 Mr P W Taylor SC, Senior Member
BACKGROUND
1.On 8 June 2006 the Companies Auditors and Liquidators Disciplinary Board (‘the CALD Board’) determined that Mr Joseph Sleiman had failed to carry out adequately or properly functions required of him as a registered liquidator.
2.On 12 September 2006, as a consequence of its 8 June 2006 determination, the CALD Board made an order, under section 1292(2) of the Corporations Act 2001, that Mr Sleiman’s registration as a liquidator be cancelled. The formal Notice of Decision was issued by the registrar of the CALD Board, and sent to Mr Sleiman, on 18 September 2006. By virtue of section 1297(1), the cancellation order took effect on that day.
3.Mr Sleiman applied to the Tribunal, under section 1317B of the Corporations Act 2001, on 21 September 2006 for review of the CALD Board’s decision ordering the cancellation of his registration as a liquidator. The Australian Securities and Investments Commission (‘ASIC’) was the applicant in the proceedings before the CALD Board. On 17 November 2006 the Tribunal made a direction under section 30(1A) of the Administrative Appeals Tribunal Act 1975 (‘the AAT Act’) adding ASIC as a party to the review proceedings.
4.Mr Sleiman's application for review was the subject of directions hearings before the Tribunal on 2 and 16 February 2007. Mr Sleiman appeared on his own behalf at those directions hearings. He also appeared on his own behalf at the hearing on 16 April 2007.
5.The CALD Board’s 8 June 2006 determination involved adverse findings in relation to Mr Sleiman’s conduct as voluntary administrator of 4 companies between June 2002 and March 2004. The companies involved were Al Ponte Restaurant Pty Ltd (two adverse findings relating to delay), Modesta Pty Ltd (two adverse findings relating to advertising and investigation), Australian District Services Pty Ltd (two adverse findings relating to advertising and investigation) Paradise Constructors Pty Ltd (nine adverse findings relating to inadequate investigation and lack of independence).
6.At the first directions hearing on 2 February 2007 ASIC foreshadowed filing a Statement of Facts and Contentions relying on matters additional to those dealt with in the proceedings before the CALD Board. In part these were said to arise from information that had become available following orders made in the Federal Court of Australia on 6 October 2006. (Those orders, made as a consequence of the CALD Board’s cancellation order, removed Mr Sleiman as liquidator or administrator of all the corporations in respect of which he had been appointed.) But ASIC also foreshadowed a contention that Mr Sleiman was suffering from a psychotic illness - paranoid schizophrenia – and that the illness rendered Mr Sleiman unfit to remain registered as a liquidator in any event.
7.In compliance with the Tribunal’s directions, ASIC provided a draft of the foreshadowed Statement of Facts and Contentions on 14 February 2007. An amended version was lodged shortly before the further directions hearing on 16 February 2007. The amended version of the Statement of Facts and Contentions raised alleged failures by Mr Sleiman in relation to his conduct, over the period from 2003 to 2006, as an administrator, liquidator or official liquidator in connection with some 12 corporations additional to those that had been referred to in the proceedings before the CALD Board. It also included the contention that Mr Sleiman was suffering from paranoid schizophrenia.
8.ASIC’s reliance on matters additional to those considered by the CALD Board, is consistent with the Tribunal’s decisions in Farley and Australian Securities Investments Commission (1998) 16 ACLC 1502 [1998] AATA 495 and Re Wharton and Australian Securities and Investments Commission (2002) 69 ALD 419 Wharton’s case involved an application to review an ASIC decision, under section 829 of the then Corporations Law, prohibiting Mr Wharton from doing any act as a representative of a "dealer" or "investment adviser". Section 829 of the Corporations Law specified some seven alternative grounds upon which such an order could be made. One such ground was that Mr Wharton had become "an insolvent under Administration". That was the ground explicitly relied upon by ASIC when it made the relevant order: see 69 ALD 419 at 422 paragraph (15).
9.In the review proceedings the Tribunal determined that it was not confined to a consideration of that ground. In so doing the Tribunal distinguished between, on the one hand, the criteria that were conditions precedent to the exercise of the decision making power and, on the other, the actual discretionary exercise of the power. The Tribunal held that whilst only the ultimate decision was reviewable – having regard to the terms of section 1317B of the Corporations Law (see now section 1317B of the Corporations Act 2001) – the effective exercise of the review power required that the Tribunal be free to reconsider the application of any of the criteria on which the proper exercise of the statutory power might depend: see 69 ALD 419 at 427 paragraph (37). This was because, in the absence of any contrary statutory provision, the Tribunal’s function under section 43 of the AAT Act, was to determine “the correct or preferable (decision) on the material before the Tribunal” – as distinct from determining what was the preferable decision on the material before the original decision maker” see 69 ALD 419 at 425, citing Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 77-8.
10.Although the reviewable decision in Wharton was different from the cancellation decision made by the CALD Board in the present case, the difference is not material in determining the scope of the Tribunal’s review function. The right of review conferred by section 1317B of the Corporations Act 2001 is to substantially the same effect as that considered in Wharton, and there is nothing elsewhere to limit the Tribunal’s review function. For that reason it is likely to be appropriate, subject to being satisfied that Mr Sleiman has a proper opportunity to deal with them, and subject to any order that might be made under section 25(4A) of the AAT Act, for ASIC to seek to support the cancellation order against Mr Sleiman on the additional grounds contained in its amended Statement of Facts and Contentions.
11.ASIC’s reliance on both Mr Sleiman’s alleged psychotic illness, and his conduct failures in relation to the performance of his duties as a registered liquidator, address alternative grounds for cancellation or suspension under section 1292(2) of the Corporations Act 2001. The question of a person’s fitness to remain “registered as a liquidator” can arise under section 1292(2) irrespective of any proven failure on their part in relation to the performance of their duties: see Davies v Australian Securities Commission (1995) 59 FCR 221 at 233-4. The subsection provides five alternative grounds on which a liquidator’s registration may be suspended or cancelled and is in the following terms
1292 (2) The Board may, if it is satisfied on an application by ASIC for a person who is registered as a liquidator to be dealt with under this section that, before, at or after the commencement of this section:
(a) the person has:
(i) contravened section 1288; or
(ii) ceased to be resident in Australia; or
(d) that the person has failed, whether in or outside this jurisdiction, to carry out or perform adequately and properly:
(i) the duties of a liquidator; or
(ii) any duties or functions required by an Australian law to be carried out or performed by a registered liquidator;
or is otherwise not a fit and proper person to remain registered as a liquidator;
by order, cancel, or suspend for a specified period, the registration of the person as a liquidator.
12.At the directions hearing on 2 February 2007 the Tribunal canvassed with ASIC and Mr Sleiman the possibility of a separate determination of ASIC’s claim that he was suffering from a psychotic illness that would affect an assessment of whether he was “otherwise not a fit and proper person to remain registered as a liquidator”. When ASIC provided its 16 February 2007 Statement of Facts and Contentions, and claimed that Mr Sleiman was suffering from paranoid schizophrenia, it indicated a view that the Tribunal could deal with that question as a separate and preliminary matter.
13.Mr Sleiman’s attitude to the proposal for the separate determination is a little difficult to describe with complete accuracy. The difficulty principally relates to the matters that ASIC contended were the delusions evidencing his paranoid schizophrenia. It will suffice, for present purposes, to refer to Mr Sleiman’s claims that (i) the Government had secretly implanted an “inventory system” in his body and that (ii) unknown persons had intruded into his office and removed material from his files. Mr Sleiman contended that it would be “undemocratic” for his registration to be removed as a result of conduct whilst the “inventory system” had been deployed. He also thought that medical evidence of the kind contemplated by ASIC would just “cloud the issues” and was not necessary to consider. He said that the “inventory system” had been surgically removed at the Royal North Shore Hospital in September 2006 and that the additional matters on which ASIC was seeking to rely whilst it was in place was “something in the past”. He told the Tribunal that he preferred to have the Tribunal deal with the substantive matters that had been considered by the CALD Board.
14.Mr Sleiman’s response, during the 16 February 2007 directions hearing, to ASIC’s claim that he was suffering from paranoid schizophrenia, and to the suggestion that the claim should be separately determined, encouraged ASIC to provide the Tribunal with a copy of an 8 February 2007 report by a psychiatrist - Dr Lana Kossoff. The thrust of Dr Kossoff’s report was that Mr Sleiman appeared to be suffering from “persecutory and bizarre delusions” and that the presence of these delusions was likely to lead to frequent misinterpretation of day to day events. That misinterpretation of events could adversely affect the judgmental decisions he would be called on to make in the exercise of duties as a liquidator or administrator. It will be necessary to say more about Dr Kossoff’s report later, it is presently sufficient to note merely that it appeared to give some substance to ASIC’s claim and to support the desirability of an early assessment of Mr Sleiman’s apparent mental health.
15.Accordingly, at the hearing on 16 February 2007 the Tribunal gave a direction under section 33 of the AAT Act (1975) for the separate determination of several questions arising from ASIC’s contention that Mr Sleiman was suffering from a psychotic illness. The Tribunal’s direction was that
1. The following questions be determined separately and in advance of any other matters relied upon in the ASIC's Statement of Facts and Contentions;
1.1 whether Mr Sleiman is suffering from an illness which renders him
(a) incapable of managing his affairs, or
(b) alternatively, not a fit and proper person to remain registered as a Liquidator
1.2 whether, and if so to what extent, Mr Sleiman is suffering from an illness which materially impedes his ability to participate effectively in the conduct of the proceedings;
1.3whether, and if so to what extent, Mr Sleiman is suffering from an illness which may be exacerbated or prolonged by the conduct of the review proceedings - assuming they include all of the matters relied upon in ASIC’s Statement of Facts and Contentions and are conducted by way of a continuous hearing involving all those matters;
1.4whether the Tribunal should exercise the power conferred by s 25(4A) of the AAT Act to determine the scope of the review by limiting the issues it considers in determining the application for review to (different alternative groupings of the various allegations set out in ASIC’s Statement of Facts and Contentions).
16.The Tribunal also gave directions in relation to the provision of any expert evidence related to the determination of these questions. Mr Sleiman’s apparent financial circumstances, and the nature of the questions for determination, suggested the desirability that any expert evidence be provided by an expert who properly understood his position and interests and would act as a joint expert for the purpose of assisting the Tribunal. Accordingly the Tribunal directed that any expert report that ASIC provided should comply with the Expert Witness Code of Conduct as set out in Schedule 7 of the NSW Uniform Civil Procedure Rules. The Tribunal also directed ASIC to inform the Tribunal and Mr Sleiman whether the expert was prepared to undertake to prepare their report and evidence on the basis that they would act as a joint expert. Anticipating that the expert would provide such an undertaking, the Tribunal directed that Mr Sleiman provide the expert with such information as they might reasonably require for the purpose of preparing their report.
ISSUES FOR DETERMINATION
17.The first three of the questions posed for determination were the subject of a hearing before the Tribunal on 16 April 2007. These reasons address those three questions. In so doing they review in detail the matters ASIC relies on as evidence of Mr Sleiman’s psychotic illness.
18.The detailed account may be a source of embarrassment for Mr Sleiman personally, but it should not be so regarded. The psychiatric opinions to which I refer comfortably justify the diagnosis that Mr Sleiman has an acute psychotic illness. They also establish that the illness is characterised by delusions and by lack of insight into the effects of the illness. If the only relevant consideration was the fact of the illness, and its likely significance to Mr Sleiman’s current fitness for registration, it might have been desirable for these reasons to contain a less detailed outline of Mr Sleiman’s symptoms. However, it is also necessary to consider the possible relevance of Mr Sleiman’s illness to his past conduct and to the determination of the other substantive matters ASIC has outlined in its Amended Statement of Facts and Contentions. For that reason it is important that these reasons fully address the extent of Mr Sleiman’s symptoms. In light of that consideration both Mr Sleiman and ASIC will have the best opportunity to determine the stance they wish to take in relation to the future course of the review proceedings.
QUESTION 1 – WHETHER MR SLEIMAN IS SUFFERING FROM A PSYHOTIC ILLNESS?
19.At the hearing on 16 April 2007 ASIC relied upon the reports of two psychiatrists - Dr Lana Kossoff and Dr Angelo Virgona. Both of the psychiatrists considered that Mr Sleiman was suffering from paranoid schizophrenia. Both of them gave evidence elaborating upon their written reports.
20.Dr Kossoff is currently a Visiting Medical Officer at Sutherland Hospital and the Mid North Coast Area Health Service. She also conducts a private medico legal practice and is a member of the forensic section of the Royal Australian and New Zealand College of Psychiatrists. She trained in psychiatry at the Royal Prince Alfred Hospital, the Northside Clinic and Macquarie Hospital. Since 1985 she has worked extensively in mental health services within the New South Wales public health system. She became a fellow of the Royal Australian and New Zealand College of Psychiatrists in 1992. Between 1992 and 1995 she worked as a Unit Director at Macquarie Hospital. From 1997 until 2002 she was the Executive Director of Macquarie Hospital - a 180 bed public hospital specialising in the treatment of mental illness. As executive director Dr Kossoff had both clinical and administrative roles. Dr Kossoff’s experience in the public health system has predominantly involved the treatment of psychotic illness. She told the Tribunal that she had been extensively involved with psychotic patients both in the context of “acute admission” and also in the context of rehabilitation. She had treated thousands of people with schizophrenia over the course of her career.
21.Dr Kossoff did not examine Mr Sleiman. Her 8 February 2007 report was based upon an examination of aspects of Mr Sleiman’s conduct and statements as recorded in:
21.1Mr Sleiman’s 19 April 2005 statement in the proceedings before the CALD Board;
21.2The transcript of the cross examination of Mr Sleiman on 14 December 2005 in the proceedings before the CALD Board;
21.3Mr Sleiman’s 31 October 2006 statement made for the purposes of the review proceedings in the Administrative Appeals Tribunal;
21.4The transcript of the hearing of a stay application in the present proceedings on 15 January 2007;
21.5The transcript of the directions hearing on 2 February 2007 in the present proceedings.
22.In his 19 April 2005 statement Mr Sleiman claimed to have suffered a series of misfortunes at three different addresses. These misfortunes included being subjected to the use of a magnetic force weapon that penetrated walls and floors of his unit at Bunn Street, Pyrmont. It caused him to move to another unit in Murray St Pyrmont. He described the Murray Street unit as a trap. Neighbours in adjoining premises would vacate them whenever “the protagonist” wanted to use the magnetic force weapon. He said that at times his skin would be burnt and it would stink. He had damage done to his teeth and back. He also had a death attempt when he apparently consumed poison but regurgitated it before almost passing out. He claimed to have suffered damage to items within his unit and damage to his car. He reported this to the police, and also engaged a private investigator to search his apartment for concealed cameras. Nothing came of those reports.
23.Mr Sleiman’s 19 April 2005 statement claims his problems continued at his third address at St Leonards. He reported a number of intrusions to the police, including damage to a security system he had installed. He was told it was not a police matter. Strange cooking smells, and miscellaneous, generally minor, damage to clothing, furniture and his motor car, had occurred at the new address. Use of the electromagnetic force weapon also occurred at the new address. He suffered hair loss, both as a result of the use of the weapon and by hair being removed when he was unconscious. (He described the latter as “the Hoover Treatment”.) He claimed his skull was distorted as a result of having had his head compressed. He had suffered abnormal weight gain as a result of having consumed some product that increased fat and water retention. He explained that his abnormal weight gain was known as “Chug”.
24.In the last part of his 19 April 2005 statement Mr Sleiman reported that an “inventory system” had been placed in his stomach over a year ago. This system was affected by the use of the magnetic force weapon and caused reverberations in his body. Another device, which restricted his breathing, had also been implanted. He thought this device was externally operable. Mr Sleiman explained that he was living with a doctor who had been brought in to remove the inventory system without his knowledge. He thought he was a target. He was frightened and in need of assistance to defeat the intruders and their unlawful acts.
25.The transcript of Mr Sleiman’s cross-examination in December 2005 in the proceedings before the CALD Board records similar matters. There are references to intruders to his apartment – their secret access being facilitated by the use of concealed cameras. The intruders removed documents from his files. He had been caused to consume poison on occasions. There are also references to the use of the electromagnetic force weapon and to damage being done to his back whilst he was unconscious.
26.Mr Sleiman’s 31 October 2006 statement in the review proceedings in the Tribunal consists of an 11 page letter and an eight page formal statement in response to the specific matters found by the CALD Board. The eight page statement is a well structured document. It identifies ASIC’s relevant allegations against him, shortly states Mr Sleiman’s response to the CALD Board’s adverse finding, and continues with a further comment by way of explanation or exculpation. Typically the comments are succinct, and although sometimes slightly repetitive, apparently logical and well focussed. The individual comments were not subjected to any detailed examination about their accuracy or reliability at the 16 April 2007 hearing, but the overall impression the document conveys is that Mr Sleiman has a good understanding of ASIC’s complaints against him and has the intellectual capacity to present a defence to those complaints based on apparently objective information or reasonable argument.
27.Mr Sleiman’s 11 page letter of 31 October 2006 also contains responses to the adverse findings made in the CALD Board’s 6 June 2006 determination. It deals with them in a more general manner than does the eight page statement. The 31 October 2006 letter lists the 4 administrations that were the subject of the proceedings before the CALD Board. It attempts, in the main, to provide factual responses challenging the accuracy, or at least the significance, of the Board’s findings. To a substantial extent the letter reveals a reasonable understanding of the nature of the complaints that were made against him and also of the reasons why the Board made its adverse findings.
28.However, parts of the 31 October 2006 letter display the continuing influence of the matters recorded in the earlier statements of Mr Sleiman - to which I have referred above. Mr Sleiman complained about the reliance ASIC had placed on the absence of relevant records in his files, and about the “reluctance” of the CALD Board to listen to his contentions. He complained that ASIC was “heavy handed” in relying on the absence of records from his files. Mr Sleiman referred to the intrusions into his office. He suggested that “market players” were responsible for the fact that documents were missing. He said that the “soiling of files” was not “uncommon in the marketplace and is a recognized occurrence”. He inferred that the purpose was to cause problems for a practitioner in “the regulatory process”. He complained that ASIC was not dealing with “the perpetrators”.
29.He also complained that ASIC had “generated” the complaints in relation to the Paradise Constructors Pty Ltd administration and was trying to use non-compliance “with the letter of the law” as a means of cancelling his registration and avoiding any political pressure that its involvement might otherwise generate. He went on, in a later part of the letter to complain that his treatment by the CALD Board was heavy-handed and indirectly attributable to the fact that Australia did not have a Human Rights Act. He again referred to the “many incidents that have occurred over the past four years” and which he had reported to the police. He said that these “violations and trespassing” were likely to be the result of systematic corruption and collusive behaviour that was prevalent in the marketplace and, a business tool for some Australians. He complained it was impossible for a small practitioner to compete with corruption. He said that corruption was prevalent in Government. He complained that Italians were favoured in the market and that racism within the Government should not be underestimated.
30.Much of the structure, and many of the comments contained in the 31 October 2006 letter, undermine the impression conveyed by the eight page formal statement. A significant purpose of the letter is to identify “extenuating circumstances” allegedly relevant to an assessment of Mr Sleiman’s fitness. But the contents of the letter include the disjointed, implausible and apparently irrelevant comments and claims summarised in the preceding paragraph. The letter conveys the impression of an inability to concentrate on relevant considerations. Many of the comments appear deluded, but are put forward without any evident insight into the likelihood that they would be perceived as extravagant and incredible. In at least one place apparently inconsistent propositions are advanced in consecutive sentences. On page eight of the letter Mr Sleiman contends that the adequacy of his investigations should not be assessed in the same way as a large firm with a large budget, but he also says the adequacy of investigation does not change with resources. The letter appears to provide an example of delusional and disordered thought, an aspect of his conduct that was very significant for the purposes of the psychiatric evidence referred to later in these reasons.
31.In the course of the 15 January 2007 hearing of Mr Sleiman’s stay application ASIC drew the Tribunal’s attention to both Mr Sleiman’s 19 April 2005 statement and various passages in the transcript of his oral evidence before the CALD Board where he was asked about those matters. In answering questions from the Tribunal Mr Sleiman again referred to the impact of “intrusions” where he lived, the alleged circumvention of his security system, and the alleged activities of a “local area network”. When asked to explain what he meant by the latter, his answer was a vague, incredible and barely comprehensible allusion to a kind of conspiratorial association.
32.In the course of the directions hearing before the Tribunal on 2 February 2007 Mr Sleiman again referred to “outside influences” which had affected his practice activities as a liquidator. These included the “inventory unit” which he said had been deployed by the government. This was done at some time that could have been before April 2002. He said he had surgery at the Royal North Shore Hospital in September 2006 but had not been able to find out what had been removed. Neither the government nor the doctors would provide any information.
33.Dr Kossoff based her 8 April 2007 report on her examination of the documents summarised in the preceding paragraphs of these reasons. She opined that Mr Sleiman met all the criteria for the diagnosis of paranoid schizophrenia – according to the Diagnostic and Statistical Manual of Mental Disorders – DSM-IV – TR. Dr Kossoff explained that the relevant diagnostic criteria were (i) characteristic symptoms – including at least two of the following: delusions, hallucinations, disorganised speech, grossly disorganised or catatonic behaviour or negative symptoms (ii) social and occupational dysfunction and (iii) duration of at least six months. The diagnosis required that the symptoms not be explicable by physiological or developmental causes nor involve a significant mood disorder.
34.Dr Kossoff described a delusion as a fixed false belief not in keeping with usual societal or cultural expectations. She considered that Mr Sleiman’s complaints about concealed cameras in his apartment, poisoning, intrusions into his premises, and the “inventory system” he claimed had been placed inside his body, were indicative of persecutory delusions. She also thought that his complaints about the electromagnetic force weapon, and complaints about damage to his skull, skin, teeth and back, together with the suggestion that some other implanted device caused breathing difficulties, represented bizarre delusions. Mr Sleiman’s complaints about cooking smells, and the smell of burning skin, as well as his complaint about having been hit by electromagnetic waves, likely involved hallucinations of touch and smell. Dr Kossoff also noted that some of Mr Sleiman’s accounts of these various matters displayed a distinct type of formal thought disorder involving the use of neologisms (the coining of words). She illustrated this proposition by reference to Mr Sleiman’s use of strange descriptive names (such as “Chug” and “Hoover treatment”) and his suggestion that these represented some kind of generally accepted usage for the bizarre events in connection with which he used them. In her experience the use of neologisms was one of the characteristics of schizophrenia.
35.Having regard to the contents of the documents she examined, Dr Kossoff was well justified in her opinion that Mr Sleiman displayed the relevant “characteristic” symptoms of paranoid schizophrenia. In addition, based on the material she examined, there was significant evidence that those symptoms had been present for more than six months.
36.The remaining relevant diagnostic criterion for schizophrenia is the existence of social and occupational dysfunction. Dr Kossoff dealt with this in her report principally on the basis of an assumption that the proceedings taken against Mr Sleiman by ASIC, and which had resulted in the adverse findings made by the CALD Board, indicated at least some respects in which Mr Sleiman had failed to meet his obligations as a liquidator. For that reason she considered the diagnostic criterion of social and occupational dysfunction had also been met. In expressing that opinion, and later in her report where she considered Mr Sleiman’s fitness to remain as a registered liquidator, she drew support from a number of passages (principally in the December 2005 transcript) in which Mr Sleiman had himself attributed some of his conduct difficulties in his role as liquidator to “outside influences”, “incursions” and “other factors”. (In the context in which those expressions were used, they were oblique references to the various matters referred to in the earlier paragraphs of these reasons.)
37.There is a marked contrast between, on the one hand, the extraordinary nature of some of Mr Sleiman’s claims and, on the other hand, the apparent adequacy of his cognitive functioning in other aspects of his conduct and behaviour. This contrast is apparent in the comparison of the contents of his 31 October 2006 letter with his 30 October 2006 statement. It was also displayed in the course of his cross examination of Dr Virgona. Mr Sleiman challenged Dr Virgona’s opinions on two bases (i) that he characterised Mr Sleiman’s claims as delusions simply because he had no personal or clinical experience of such matters having occurred, and (ii) Dr Virgona’s opinion that Mr Sleiman had significant social and occupational dysfunction was wholly based upon his general assumption about the significance of the CALD Board proceedings and findings. In relation to the first point, there was an element of undeniably logical purpose in Mr Sleiman’s question, despite the lack of insight into the incredibility of the “facts” for which he contended. In relation to the second matter Mr Sleiman extracted an appropriate concession from Dr Virgona that his apparent social dysfunction might be explicable by loss of income following the cancellation of his registration.
38.Dr Kossoff’s 8 February 2007 report partly addressed this contrast and she elaborated upon it in the course of her oral evidence. Dr Kossoff explained that the essential feature of paranoid schizophrenia was the presence of prominent delusions or hallucinations in the context of a relative preservation of cognitive functioning. Paranoid schizophrenia also typically manifested itself later in the late teens and early twenties. Where it manifested at that age it usually had a marked and severe impact on a person’s interpersonal and occupational functioning. Where schizophrenia manifested itself later in a person’s life it tended to be a more “encapsulated” type of illness that was “less disorganising, more of a paranoid type, where they can in many instances function in their day to day life, but have a delusion regarding a particular point of view”. Dr Kossoff thought that where a person was suffering from an acute psychotic illness its symptoms and effects would not generally be specific to any particular setting and could be expected to cross the boundaries between different workplace settings and between social and workplace activities.
39.In relation to Mr Sleiman himself, Dr Kossoff thought it was unusual that Mr Sleiman appeared to have been able to function at a significant level, despite the possibly long duration of his mental illness. She noted that about 10% of the schizophrenia patients she had seen and treated were able to lead a successful functional life despite the late onset of the schizophrenia. In those cases the patients had been able to “compartmentalise” their symptoms into an isolated part of their functioning. Whether any particular patient could do this depends upon the quality and severity of the particular illness. Generally there came a point in time where a person’s compartmentalisation of their illness became impossible to contain. Then the object of treatment was to either completely remove the person’s delusions or at least “compartmentalise them to the point that the person could return to normal functioning even though they have this illness”. Dr Kossoff said her experience was that approximately one third of patients achieved full remission of their symptoms after treatment. One third had poor results and the remaining third had only partial remission of their symptoms. Dr Kossoff thought the material she had examined indicated that Mr Sleiman had a relatively good ability to be able to compartmentalise and carry on, until the last period of his work as a liquidator. But whether or not he would now be able to return to adequate functioning, after treatment, was impossible to predict.
40.It was implicit in Dr Kossoff’s oral evidence, and explicit in her 8 February 2007 report, that she did not consider Mr Sleiman was “medically fit to remain registered as a liquidator while the illness is untreated”. In part, Dr Kossoff’s opinion was based upon the general assumption she made (which has been noted above) that the nature of the complaints made by ASIC in the CALD Board proceedings indicated relevant deficiencies in Mr Sleiman’s performance as a liquidator. At a more general level, however, Dr Kossoff expressed the opinion that the “acute psychotic process” evident from Mr Sleiman’s delusions and hallucinations, would be affecting his concentration and focus. It was probable that his thought processes would often be diverted to his psychotic beliefs and could readily lead to a misinterpretation of day to day occupational issues. Dr Kossoff pointed to two particular respects in which occupational performance could be affected. First of all she noted that a characteristic feature of schizophrenia was the poor insight of the patient regarding the existence and nature of the illness. Secondly she said that a common incident of schizophrenia was a disturbed sleep pattern that could result in difficulties in concentration and attention. Dr Kossoff noted that the material she examined appeared to amply justify a conclusion that Mr Sleiman had poor insight into his illness. He also had complained about disturbed sleep pattern and himself attributed it, in a general way, to some of the deficiencies in his performance as a liquidator.
41.Dr Kossoff’s opinion, particularly in relation to the probable effect of Mr Sleiman’s illness on his capacity to function properly as a liquidator, needs to be evaluated in the light of the fact that she proceeded solely on the basis of the material submitted to her and did not personally examine Mr Sleiman. In particular her, essentially pessimistic, assessment of Mr Sleiman’s likely current ability to properly carry out the duties and functions of a liquidator might conceivably have been capable of being influenced, in Mr Sleiman’s favour, if she had the benefit of such an examination.
42.Dr Virgona did examine Mr Sleiman. Dr Virgona is currently the director of clinical services for the Sydney Southwest Area Health Service and a member of the New South Wales Mental Health Priority Task Force. He became a fellow of the Royal Australian and New Zealand College of Psychiatrists in 1990 and has conducted a private psychiatric practice since that time. He has also worked as a staff specialist in psychiatry at St Vincent’s Hospital, and been a Visiting Medical Officer for the Royal Australian Navy and for the New South Wales Prison Medical Service. He has over 20 years of experience in the public sector in the provision of psychiatric services. His principal clinical experience has been in the management of early psychosis and schizophrenia.
43.Dr Virgona was provided with the documents Dr Kossoff had considered (and which have been described earlier in these reasons). He also considered the records of Mr Sleiman’s hospitalisation at the Royal North Shore Hospital in January 2003 and August 2006. In addition, Dr Virgona was provided with an August 2004 referral letter from Mr Sleiman’s local doctor, Dr Chris McMahon.
44.The Royal North Shore Hospital records relating to Mr Sleiman’s July 2003 admission indicated that he presented with a complaint of having had been “injected” or “tampered with” or been spiked with amphetamines. The records show that no abnormality was detected on physical examination and that Mr Sleiman was discharged for follow-up by his general practitioner.
45.The July 2003 hospital records are consistent with, though not necessarily probative of, Mr Sleiman then having suffered from delusions. The complaint that something had been put into his body is reminiscent of his later complaint about the “inventory system” and his belief that this was possibly implanted in 2002. The complaint itself, at least as recorded in the notes, is strangely vague and could be described as disordered. The likelihood that it is evidence of the Mr Sleiman’s psychotic illness is enhanced by the contents of Dr McMahon’s August 2004 letter. That letter is a referral for psychiatric treatment. Dr McMahon records that Mr Sleiman presented to him with florid delusional thoughts and ideation consistent with paranoid schizophrenia. Dr McMahon goes on to say that Mr Sleiman had no insight into his condition but was prepared to visit a psychiatrist.
46.The Royal North Shore Hospital records relating to Mr Sleiman’s July 2006 admission evidence that the admission was for the surgical treatment of haemorrhoids. However, elsewhere in his evidence Mr Sleiman said that this was the occasion on which the “inventory system”: was removed from his body. Nothing in the records provides any evidence that such a procedure occurred.
47.Dr Virgona reported that Mr Sleiman presented as well groomed, with neutral mood and a mildly restricted aspect. He had no apparent cognitive deficit. The history Dr Virgona obtained, and set out in his report, included Mr Sleiman’s complaints about the “inventory system” having been implanted, intrusions into his apartment, damage to his possessions, suspicions of surveillance, interference with his security system, a lack of vitality and less ability to get things done, and the use of a ray type gun against him. Mr Sleiman claimed that all of these problems had begun since he commenced his private practice in 2002. He had returned home to live with his parents, his relationship with his former girlfriend had ended and he had not had any contact with her for nine months and he had “moved away” from his previous involvement with the Liberal Party. Mr Sleiman reported to Dr Virgona that there was now a “void” in his life. Dr Virgona noted that these events appeared to evidence a significant reduction in the level of Mr Sleiman’s social interaction.
48.Dr Virgona considered that Mr Sleiman was suffering from a major psychiatric disorder that was characterised by delusions, disorganised thought processes and perceptual abnormalities. Dr Virgona considered the disorder was of such a severe character that it was likely to lead to impaired reasoning and judgment. He thought that Mr Sleiman’s ability to manage his affairs was marginal and that the higher-level tasks of working as an accountant or liquidator would be completely beyond him. Dr Virgona thought that Mr Sleiman’s illness was entrenched. The chronicity of the symptoms, and the fact that they had never been treated, made his prognosis poor. However a definite prognosis could only be made following the outcome of a trial treatment.
49.Dr Virgona thought that Mr Sleiman was not only not fit to remain registered as a liquidator but he would be unlikely to effectively participate in the proceedings before the Tribunal. Dr Virgona explained that, given his illness, Mr Sleiman was likely to interpret evidence presented in a delusional way and would not have a true appreciation of what was happening, even though he may grasp the gist of matters. Whilst Mr Sleiman’s presence at, and participation in, the Tribunal proceedings might not have a particularly deleterious effect, Dr Virgona thought that if Mr Sleiman was called to give extensive evidence this was likely to add significant stress and result in further deterioration in his mental state.
50.Dr Virgona said that the most remarkable feature of his mental state examination of Mr Sleiman was the degree of his formal thought disorder. Mr Sleiman gave tangential explanations to straightforward questions and these tangential explanations were invariably about his well systematised persecutory delusions. Dr Virgona illustrated in the course of his oral evidence what he meant by his references to Mr Sleiman’s delusions and tangential and disorganised answers. In relation to delusions Dr Virgona referred in particular to Mr Sleiman’s 19 April 2005 statement and the December 2005 transcript of his evidence in the proceedings before the CALD Board. These included the references to the electromagnetic gun, the complaint of intrusions and the implanting of the “inventory system” – all of which have been referred to earlier in these reasons.
51.In relation to Mr Sleiman’s tangential and disorganised answers Dr Virgona explained that Mr Sleiman had attributed the implantation of the “inventory system” to the Army. He then went on to refer to his brother having been in the Army for 37 years, to bureaucrats using “it” as a tool and to plastic being left out at Bondi, but “it” being more likely to involve the Army. Dr Virgona described this as involving a “clang” association, in which the sequence of statements is characterised by a connection between individual words (e.g. “Army”) rather than representing a logical development or expression of ideas. In response to Dr Virgona’s enquiry as to why Mr Sleiman would be “targeted” Mr Sleiman went on to refer to “State Rail” being known to “tag” kids, his difficulties in being prevented from pursuing his athletic career and living in a “scaled” society. As Dr Virgona observed, if there is any conceivably relevant association between these various ideas the relationship is very obscure and, some of the statements, particularly reference to a “scaled” society do not readily convey any objectively sensible meaning.
52.Whilst the disorder apparent in some of Mr Sleiman’s responses to Dr Virgona are significant, Dr Virgona conceded that his ultimate conclusion about Mr Sleiman’s ability to manage his own affairs significantly depended on an assumption about the extent to which that disorder in fact influenced Mr Sleiman’s day to day functioning. Normally a conclusion about that capacity would require a detailed history from other people, particularly family members and friends. In the absence of corroborative details from that source, Dr Virgona thought that the generalised delusional thinking which Mr Sleiman exhibited was likely to have been the predominant reason for the apparent deterioration in his occupational and social functioning. However, Dr Virgona properly conceded, in the course of Mr Sleiman’s cross examination, that another possible explanation for the apparent decline in Mr Sleiman’s circumstances was the significant impact of loss of employment and income following the cancellation of his registration. Dr Virgona also conceded, in the light of the apparent lucidity of some of Mr Sleiman’s documents (in particular the eight page statement dated 30 October 2006 referred to earlier in these reasons) and Mr Sleiman’s apparent presentation during the course of the hearing of 16 April 2007, that Mr Sleiman would be able to attend to the ordinary basic activities of day to day living, such as managing his bank account. Dr Virgona’s concern was as to the possible effect of Mr Sleiman’s delusions in leading him to make decisions that might not always be in his best interests. He cited the example of Mr Sleiman’s apparent significant expenditure in installing a security system to monitor or prevent the “intrusions” about which he complained.
53.Dr Virgona set out his understanding of the specific responsibilities of a liquidator or company administrator in his supplementary report of 2 April 2007. That understanding was based on specified passages in ASIC’s Policy Statement 186: External Administration: Liquidator Registration. Dr Virgona further explained his understanding in his oral evidence. He said that such a person would have to have good organisational capacity, good accounting skills, be able to communicate effectively (with clients and regulators), be able to create and maintain appropriate documentary records and understand their various statutory responsibilities. Dr Virgona was specifically asked by the Tribunal whether his opinion was that Mr Sleiman’s illness was unlikely to compromise his overall ability, even if there might be occasions where significant deficiencies occurred. Dr Virgona’s opinion was quite to the contrary. He considered that Mr Sleiman would face difficulties every day and that there would be significant shortfalls in his performance most, if not all, of the time. In his 2 April 2007 report Dr Virgona said that, in his opinion, Mr Sleiman would not be able to assess the reality of the commercial situation without his assessment being poisoned by his delusional thinking. Furthermore he would not be able to communicate effectively with customers, legal and financial institutions, nor with ASIC.
54.In expressing this opinion it is apparent, from the totality of his evidence, that Dr Virgona was drawing substantially upon his clinical experience and his particular expertise in relation to schizophrenia. Notwithstanding the concessions he made concerning the assumptions about the extent of the actual impact of Mr Sleiman’s illness on his day-to-day functioning, Dr Virgona was clear in stating that his clinical diagnosis of paranoid schizophrenia was clear-cut and based on his examination and assessment of Mr Sleiman. The additional documentation he had considered merely operated as an apparent reinforcement of that conclusion. In particular, in relation to the responsibility he had accepted to assist the Tribunal by presenting his opinion as a joint expert, putting forward whatever could properly be said in favour of Mr Sleiman. Dr Virgona said that there was no possibility that any further examination or discussion with Mr Sleiman would change his diagnosis favourably to Mr Sleiman. Furthermore, without treatment he could not form any optimistic view about Mr Sleiman’s ability to function effectively as a liquidator in the future. The most that could be said, given Mr Sleiman’s obvious intelligence, experience and past apparent success, at least up until the time he commenced to practice on his own account, was that with good support and treatment he should be able to improve significantly and may be able to re-enter the workforce. The timeframe involved would be three to six months after he started engaging in treatment.
55.The diagnostic opinions of Drs Kossoff and Virgona are clear and compelling. The various matters they have identified as Mr Sleiman’s delusions appear to well justify that characterisation. Their conclusions that this delusional ideation is chronic is also justified by Dr McMahon’s August 2004 referral letter, as well as the frequent references in Mr Sleiman’s evidence to the CALD Board and during his various appearances before this Tribunal. That material also demonstrates the extent of Mr Sleiman’s disorganisation – at least to the extent of his frequent display of what Dr Virgona described as Mr Sleiman’s “tangential” reasoning and what Dr Kossoff described as his examples of neologisms (the coining of new words) characteristic of schizophrenia.
QUESTION 1(A) - WHETHER MR SLEIMAN’S ILLNESS RENDERS HIM INCAPABLE OF MANAGING HIS AFFAIRS?
56.The ultimate questions for the Tribunal however are not so much questions of either diagnosis or prognosis as an assessment of the impact of Mr Sleiman’s diagnosed illness, taking into account his overt and likely symptoms. The first question is whether those symptoms deprive Mr Sleiman of the ability to manage his affairs. The second question is whether Mr Sleiman is a “fit and proper person to remain registered as a liquidator”.
57.Dr Virgona opined, in his 13 March 2007 report, that Mr Sleiman’s level of functioning was marginal and that he was apparently unable to manage his own affairs. However, in the course of cross examination it became apparent that there were two critical parts to this opinion. First of all it was substantially based upon an assumption that the major reason for Mr Sleiman not conducting any business was a decline in his functional abilities rather than the financial impact of the loss of his registration as a liquidator. That assumption had been made in the absence of any corroborative history from friends or family members. Dr Virgona said that the history of that kind is one that he would normally get in order to make an informed assessment about an individual’s day-to-day functioning. The second important aspect of Dr Virgona’s opinion emerged in the course of cross examination and has already been referred to earlier in the submissions. It was to the effect that whilst Mr Sleiman was likely to be able to attend to all of the ordinary aspects of managing his affairs there might be occasions on which, one or other of his delusions may influence him to incur objectively unreasonable expenses. Dr Virgona cited the example of Mr Sleiman’s purchase of a security system.
58.The better view of the evidence is that Mr Sleiman retains a significant cognitive ability and intelligence. Even Dr Virgona’s own assessment is that his ability is adequate to permit Mr Sleiman to carry out his ordinary day to day activities including the management of his financial affairs. Whilst the expenditure on the security system, if it was solely influenced by the delusional “intrusions” of which Mr Sleiman complains, might be classified as objectively unreasonable, it is insufficient to justify a positive conclusion of Mr Sleiman’s current incapacity to manage his own affairs. There is no evidence, for example, of Mr Sleiman’s financial circumstances at the time, nothing to suggest that the expenditure imperilled his financial situation at the time, and nothing to suggest any ongoing misapprehension on his part about his current financial means and circumstances. Dr Virgona’s concerns are understandable but, particularly in the absence of any corroborative history of the kind he would normally obtain, do not justify an affirmative finding that Mr Sleiman is currently incapable, as a consequence of his schizophrenia, of managing his affairs.
QUESTION 1(B) - IS MR SLEIMAN A FIT AND PROPER PERSON TO REMAIN REGISTERED AS A LIQUIDATOR?
59.The question of Mr Sleiman’s fitness to remain registered can only be addressed, as ASIC emphasised in its submissions, with an awareness of the functions and duties a registered liquidator is required to carry out and discharge.
60.As indicated earlier in these reasons, the contents of Mr Sleiman’s letter and statement dated 30 and 31 October 2006 evidence a significant cognitive ability, including some degree of ability to express himself without any overt reference to his delusional ideation. Similar appearances are presented by the various parts of the transcript evidence referred to earlier in these reasons. For example, much of the transcript of the stay application to the Tribunal on 15 January 2007 is an unremarkable record of Mr Sleiman’s conduct – at least until ASIC drew the Tribunal’s attention to the contents of Mr Sleiman’s 19 April 2005 statement.
61.However, a consistently recurring aspect of Mr Sleiman’s conduct in relation to the CALD Board proceedings, and the proceedings in this Tribunal, has been his references to the various matters described in the reports of Dr Kossoff and Dr Virgona and which they have correctly characterised as delusions. The consistency of these delusions and their chronicity (going back to at least April 2005, probably to the August 2004 consultation with Dr McMahon, and possibly also back to his July 2003 presentation to the Royal North Shore Hospital) are regarded as highly significant by the two psychiatrists. They consider that Mr Sleiman displays patterns of speech and thought which, in the light of their substantial experience in the diagnosis and treatment of schizophrenia, they regard as indicative of significantly disordered intellectual functioning. In particular, Dr Virgona’s report, in the history he recites, records Mr Sleiman having a significant difficulty in effective communication. This is particularly illustrated by what Dr Virgona described as Mr Sleiman’s tangential responses to questions.
62.Given Mr Sleiman’s delusions as well as the distorted thought evident in the transcript and Dr Virgona’s history, it would not be proper to conclude that Mr Sleiman was a fit and proper person to remain as a liquidator unless, at least, the Tribunal was affirmatively satisfied that his illness was likely to be “compartmentalised” and unlikely to have any material impact on the performance of his functions and duties as a registered liquidator. The evidence does not permit the Tribunal to conclude that it has the requisite degree of satisfaction.
63.The high point of the evidence, in favour of Mr Sleiman’s current fitness, is Dr Kossoff’s evidence that Mr Sleiman’s history suggests he had a relatively good ability to “compartmentalise” the effects of his illness and to carry on his ordinary functions with a degree of apparent competence and success. But this part of Dr Kossoff’s evidence needs to be understood against a background of the opinions she expressed in her 8 February 2007 report. In particular, the fundamental point she made was that the psychotic illness predisposed Mr Sleiman to misinterpretation and misjudgment of events. The influential factors in that regard were the presence of delusions and the typical schizophrenic patient’s poor insight into the condition. In addition disturbed sleep patterns were prevalent in schizophrenia and the illness inherently involved the diversion of thought processes to psychotic beliefs. Both the likelihood of disturbed sleep and the prevalence of delusional thought processes were likely to result in difficulties of concentration and attention. Because of these factors Dr Kossoff considered that Mr Sleiman’s ability to perform in the role of a liquidator was compromised to the extent that she regarded him as medically unfit.
64.Dr Virgona’s opinion was substantially to the same effect. In particular, in the course of his oral evidence Dr Virgona explained that the particular problem, in the case of Mr Sleiman’s illness was the inherent difficulty of predicting the extent to which Mr Sleiman’s delusional thinking would be likely to motivate his decision-making. Dr Virgona expressed this opinion specifically in response to a question about Mr Sleiman’s likely ability to properly carry on management of a business that he undertook as an administrator. Dr Virgona considered there was a real risk that, in his dealings with other people Mr Sleiman may ascribe motivations to them which were based upon his delusions. That risk, in Dr Virgona’s opinion, would severely impact upon his ability to discharge his affairs in a competent manner and would render him incapable of running a business.
65.Dr Virgona’s opinion is persuasive for a number of reasons. First of all it is the considered view of a clinician who is very experienced in the treatment of schizophrenia. His opinion that the delusional thinking which characterises Mr Sleiman’s illness is unpredictable in its consequences and carries a significant risk of severely impairing the ability to make a sound business judgments (that is judgments that would be in the best interests of creditors and shareholders) must be given considerable weight. Secondly, the evidence comfortably justifies the conclusion that Mr Sleiman suffers from delusional ideation and has done so for many years. The delusions themselves have some relationship with his business as an insolvency practitioner. This is because Mr Sleiman himself suggests (in his 31 October 2006 letter, the 2 February 2007 transcript and in the course of his cross examination on 16 April 2007) that at least the “intrusions” are relevant to what he describes as the “soiling” of his files (an expression apparently intended to refer to the malicious removal of documents from his files). The very fact that Mr Sleiman perceives such a connection to exist, even though he tends to minimise its significance to a proper assessment of the propriety of his conduct, severely undermines any ability to be satisfied that his delusional ideation is not likely to affect the quality of his performance as a liquidator.
66.The third reason why Dr Virgona’s opinion is persuasive relates to an aspect of Mr Sleiman’s conduct in connection with the hearing on 16 April 2007. Earlier these reasons described the process, including the directions hearings on 2 and 16 February 2007, that led to the Tribunal’s direction for the separate determination of the three questions relating to Mr Sleiman’s psychiatric illness. Mr Sleiman was present at the hearing on 16 February 2007. He was provided with a copy of Dr Kossoff’s report at that time. The transcript records his acknowledgment of having read the report. He was also given a copy of the proposed directions, which included a proposed separate determination of the question raised in Dr Kossoff’s report. Page 118 of the 16 February 2007 transcript specifically records that Mr Sleiman was told, and acknowledged, that “just the health issue” would be the subject of the hearing on 16 April 2007. Later (at pages 119 and 120) the transcript records a further exchange in which Mr Sleiman appeared to acknowledge an awareness that the hearing was to determine his “current ability to serve in practice as a fit and proper person” and that this would involve an assessment of his current condition “not something in the past”.
67.On about 15 March 2007 Mr Sleiman was given a copy of the reports of Drs Kossoff and Virgona. He was also given copies of the material that had been provided to them. Dr Virgona’s report set out the three specific questions that had been posed in the 16 February 2007 directions for separate determination. In addition, Mr Sleiman was given a copy of the directions at the hearing on 16 April 2007 and asked whether he understood what was proposed to be decided at the hearing. His answer was “yes I do, with only one qualification, that- so you make a determination whether extenuating circumstances can be utilised in the proceedings”. The transcript records that the Tribunal then informed Mr Sleiman that the question to be decided was whether or not he had “a psychiatric illness that makes you a fit and proper person to act as an administrator or company liquidator”. After a further exchange Mr Sleiman acknowledged that the matters to be decided were the four questions set out earlier in these reasons. Drs Kossoff and Virgona then gave evidence, as did Mr Sleiman (albeit briefly) and Mr McNally addressed on behalf of ASIC. Mr McNally’s address did not allude to the substantive matters involved in the CALD Board’s adverse findings.
68.Both the directions that had been made, as well as the course of the hearing on 16 April 2007, should have conveyed to Mr Sleiman a clear understanding that it was not intended to address the substance of the findings made by the CALD Board. Nevertheless, when Mr Sleiman commenced his submissions on 16 April 2007 the first thing he said was to enquire “are we looking at the extenuating circumstances, or shall we focus on my statement, which was on the technical aspects. So I have got basically two sides to what I’m going to put forward, and that is the technical aspects, and referring back to case law”. Mr Sleiman’s reference to his statement and the “technical aspects” appeared to be a reference to his eight page formal statement of 30 October 2006. That statement listed each of the specific matters that the CALD Board had found against him and included his response to those findings. Mr Sleiman’s question, and his reference to wanting to put forward submissions on “the technical aspects”, appeared to indicate his misunderstanding about the nature and purpose of the 16 April 2007 hearing.
69.Again the Tribunal pointed out to him that “technical issues” would only arise to be determined after the decision on the question of his illness had been decided. Mr Sleiman responded with some short submissions (occupying less than a page of transcript). In the submissions he said the “inventory system” had been removed, he had moved his residence but intrusions were continuing. He could not do any more to improve his living arrangements. It was now up to the authorities to take action and “that” was what had actually affected his past performance. Whilst he did not admit that he had not performed, the doctors reports indicated that perhaps his performance had perhaps been diminished. But he wanted to point out that this was because of “these unusual things that have happened” and the “intrusions which I have reported”. He then said “the other matters specifically relate to tomorrow’s hearing, which is the technical aspects and the legal aspects and what I would claim is the errors that have been made in the decision”.
70.The fact that Mr Sleiman ended his brief submissions to the Tribunal on 16 April 2007 in this manner was disconcerting. This was the third occasion on that day when he appeared not to have understood the purpose of the proceedings. When this was pointed out to him again Mr Sleiman responded that he knew what today’s hearing was about. It involved the four points to which his attention had previously been drawn. The following exchange then occurred between Mr Sleiman and the Tribunal.
MR TAYLOR: But why that troubles me is that both the doctors have expressed the view that what they regard as your delusions or hallucinations, both of them seem to think that the effect of those things was real, and neither of them seem to think that you could confine your illness to non-professional aspects of your judgment. And both of them, having said that, I am getting the distinct impression that there is a very tangible illustration of the problem that arises, namely that you have simply not understood what today's hearing and what tomorrow's hearing was intended to be about.
Now, you might like to have a think about that overnight and see whether or not the problem, as it appears to me, is one of my understanding of your position or whether it really is one of your inability to understand.
MR SLEIMAN: I mean, it is very clear to me. I have no hesitation in saying - I mean, my decision is one of commercial decisions, commercial decisions on the job. They are not affected by other matters outside the job. My management of my firm may be affected but the job decisions are not. There may be some disruptions which may compress time but the decisions I would make, I would probably make very similar decisions now in light of other information which has been brought to light.
MR TAYLOR: Well, I don't wish to say anything more about that which, don't misunderstand, I don't regard your explanation at the moment as acceptable but I don't think there is anything to be gained by pursuing it at the moment.
MR SLEIMAN: I can clearly show that the commercial decisions I have made have been of the highest standard. In particular I will point to that. Absolutely no other decision could have been made, and there is errors in what they have said.
71.Mr Sleiman’s position at the hearing was admittedly invidious. He was being asked to deal, unrepresented, with impressive medical evidence suggesting that he had a significant psychiatric illness. The illness was one characterised by delusions. His delusions were such that he lacked relevant insight, particularly about the extent to which the delusions potentially affected his capacity to continue to conduct his accounting practice and to act as a company administrator. It may have been difficult for even a well person to confront this evidence. But such a person would at least have to display a proper understanding of the process in which he was participating. And if they challenged the medical evidence, they would have to be able to advance a rational argument for criticising the medical experts’ opinions. Mr Sleiman’s reply – in the two transcript passages attributed to him in the extract set out above – did not appear to convey an accurate understanding of the task that confronted him.
72.Mr Sleiman’s response, that “it is very clear to me” and that all of his commercial decisions were unaffected “by other matters outside the job”, might possibly have been intended as an assertion that, irrespective of the psychiatrists’ schizophrenia diagnosis, he was able to demonstrate the absence of any impact on his past performance. However there are several reasons to doubt that such an interpretation represents the reality of the situation. First of all, if that was what Mr Sleiman had actually intended, it was a point that he should have made in his submissions – rather than conclude his submissions as he did and then merely herald the point as something he wanted to address in “tomorrow’s hearing” about the technical aspects. Secondly, ASIC’s submissions did not involve any specific contention that the matters dealt with by the CALD Board had in fact been demonstrably influenced by his illness. It was, therefore, neither necessary nor sufficient for him to attempt to demonstrate that his conduct in relation to those matters was in fact unrelated to his illness and its symptoms.
73.Furthermore, in so far as ASIC had relied on the absence of relevant records from Mr Sleiman’s files, and contended that the absences were broadly supportive of the risks Drs Kossoff and Virgona had identified, Mr Sleiman had conceded in his cross examination that some documents were missing from his files. He had sought to blame this on the “intrusions” and the “unusual circumstances” – influences that he said were continuing. It is not likely, therefore, that Mr Sleiman’s announced desire to deal with either “the technical aspects” or his “commercial decisions” was an attempt to deal adequately with this aspect of the risk of future irregularities in the conduct of his practice.
74.Thirdly, as the transcript extract shows, Mr Sleiman conceded the impact of those “circumstances” on the management of his practice but was contending that the effect did not extend to the commercial correctness of the decisions he had made in relation to the matters dealt with by the CALD Board. But this in itself rather tends to reveal not only a lack of insight into the nature and potential implications of his diagnosed illness, but also a lack of true understanding of the nature of the “fitness” issue that was to be determined.
75.The thrust of the medical evidence relied on by ASIC was to highlight the risk of delusion, misjudgment and disorganisation that are characteristic of schizophrenia. The significance of this evidence could not be deflected effectively merely by an attempt to demonstrate the correctness of Mr Sleiman’s conduct in relation to the matters that had been dealt with by the CALD Board and addressed in Mr Sleiman’s 30 October 2006 statement. In these circumstances Mr Sleiman’s protestation that all his past “commercial” decisions were correct, does not really address the substance of the psychiatric reports and their implications for an assessment of his ongoing fitness for registration. This is particularly the case if one has regard to the nature of the allegations that he addresses in his 30 October 2006 statement.
76.I summarised the basic nature of these complaints earlier in these reasons. None of them appears to have been situations where Mr Sleiman was involved in the conduct of an active business in his role as administrator. Some of the allegations merely involved tardiness in compliance with specific statutory requirements. Others, in particular the Paradise Constructions Pty Ltd administration, involved complaints of lack of independence and inadequate investigation of the company’s affairs. It is far from immediately apparent that complaints of any of these kinds could readily lend themselves to an acceptable explanation, on the basis of having involved “commercial decisions”, that would materially tend to reduce the significance of the psychiatric evidence of Drs Kossoff and Virgona.
77.Mr Sleiman’s apparent difficulties in understanding the intended purpose and scope of the 16 April 2007 hearing, and especially his indication that he expected the hearing on the “technical aspects” would take place on 17 April 2007 seem to evidence the risks highlighted in the evidence of Dr Kossoff and Virgona – namely that Mr Sleiman’s delusional thinking would be likely to affect his general decision making and to do so in ways that are difficult either to understand or predict. At the least the exchanges between Mr Sleiman and the Tribunal on 16 April 2007 highlight the risk of his misunderstanding and the risk of being unable to make effective decisions in difficult situations, even where he has an immediate and significant personal interest.
78.It is not appropriate, given the questions that have been posed for separate determination, and the limited scope of the evidence and submissions provided at the 16 April 2007 hearing, to examine the extent to which any of the particular adverse findings made by the CALD Board relate to conduct that is attributable, either directly or indirectly, to the effects of Mr Sleiman’s schizophrenia illness. In any event the statutory criterion in section 1292(2) of the Corporations Act 2001 is whether Mr Sleiman “is a fit and proper person to remain registered”. Where, as in the present case, the question is posed solely in the context of the effect of Mr Sleiman’s illness, it requires examination of his current and continuing capacity: Rich v Australian Securities and Investments Commission (2004) 220 CLR 129; (2004) 209 ALR 271; [2004] HCA 42per McHugh J at [42]. That capacity is relevantly established by the opinions of Drs Kossoff and Virgona. The remaining question is whether, given their explanation of the nature of Mr Sleiman’s symptoms and illness, he is fit to remain registered.
79.The “fit and proper person” criterion in section 1292(2) of the Corporations Act 2001 has been used in many statutory contexts, most notably in legislative provisions dealing with the admission and licensing of legal practitioners, doctors and related health professionals as well as a range of occupations and activities. In Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 655, in the context of considering the suitability of a legal practitioner, Isaacs J said it was a matter of common sense that “fitness” included “honesty, as well as knowledge and ability”. But it is not limited to a consideration of these matters alone. It is recognised as potentially permitting consideration of a wide range of matters. The particular considerations relevant to the assessment in any particular case will depend on the nature of the statutory benefit to which the criterion applies. In Hughes and Vale Pty Ltd v NSW (No2) (1955) 93 CLR 127 the question of “fitness” arose in the context of motor vehicle licensing. The statutory provision permitted the authority to refuse to issue a licence if it was satisfied the applicant was “not a fit and proper person”. In addressing that question the authority was required to consider the person’s “character, suitability and fitness” to hold a licence. At 93 CLR 156 Dixon CJ, McTiernan and Webb JJ said this about the width of the meaning the statutory criterion involved:
The expression fit and proper person is of course familiar enough as traditional words when used with reference to offices and perhaps vocations. But their very purpose is to give the widest scope for judgment and indeed for rejection. Fit (or idoneus) with respect to an office is said to involve three things, honesty knowledge and ability: honesty to execute it truly, without malice affection or partiality; knowledge to know what he ought duly to do; and ability as well in estate as in body, that he may intend and execute his office, when need is, diligently, and not for impotency or poverty neglect it: - Coke – (cited in Dwarris on Statues 2nd ed at 685). When the question was whether a man was a fit and proper person to hold a licence for the sale of liquor it was considered that it ought not to be confined to an inquiry into his character and that it would be unwise to attempt any definition of the matters which may legitimately be inquired into; each case must depend upon its own circumstances: R. v. Hyde Justices [1912] 1 KB 645 at 664. It is evident … the commissioner is invested with an authority to accept or reject an applicant the exercise of which depends on no certain or definite criteria and which in truth involves a very wide discretion. … What … the commissioner is required to have regard to is the character, suitability and fitness of the applicant to hold the licence applied for.
80.In Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 380 Toohey and Gaudron JJ addressed the criterion of fitness to hold a broadcasting licence. Their Honours pointed out that the question of fitness is not necessarily confined to the consideration of a person’s misconduct. It may, depending upon the statutory context, also involve a consideration of their character, capacity and reputation. Their Honours said:
The expression "fit and proper person", standing alone, carries no precise meaning. It takes its meaning from its context, from the activities in which the person is or will be engaged and the ends to be served by those activities. The concept of "fit and proper" cannot be entirely divorced from the conduct of the person who is or will be engaging in those activities. However, depending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur. The list is not exhaustive but it does indicate that, in certain contexts, character (because it provides indication of likely future conduct) or reputation (because it provides indication of public perception as to likely future conduct) may be sufficient to ground a finding that a person is not fit and proper to undertake the activities in question.
Whether the fitness and propriety of a licensee to hold a commercial licence are sufficiently ascertained by reference to its character or reputation, or must be ascertained by reference to the conduct of its affairs and activities, is a question the answer to which must be found by implication from the provisions of the Broadcasting Act dealing with the grant, renewal and revocation or suspension of a commercial licence and from the activities to be undertaken pursuant to the licence.
81.The purpose of the “fit and proper” criterion in the context of the licensing of legal practitioners has been described as entirely protective: see Clyne v New South Wales Bar Association (1960) 104 CLR 186 at 201-202; New South Wales Bar Association v Evatt (1968) 117 CLR 177 at 183-184; Smith v New South Wales Bar Association (1992) 176 CLR 256 at 270; Wentworth v New South Wales Bar Association (1992) 176 CLR 239 at 250-251. It serves essentially the same function in the case of the licensing of other professionals: Health Care Complaints Commission v Lichfield (1997) 41 NSWLR 630 at 637F-638B (sexual misconduct by doctor); Health Care Complaints Commission v Lichfield (1997) 41 NSWLR 630 at [6]; as well as in the case of tax agents registered under the Income Tax Assessment Act 1936: see Dahia v Tax Agents Board of Victoria (1997) 36 ATR 1124; Toohey v Tax Agents Board of Victoria [2007] FCA 431.
82.Sometimes the terms of the relevant statutory provisions may inform the breadth of the considerations relevant to an assessment of “fitness”. For example sections 251BC and 251JA of the Income Tax Assessment Act 1936 deal with the entitlement to prepare tax returns and the registration of tax agents. A pre-requisite for registration as a tax agent is that the relevant persons be “fit and proper”. Sub-section 251BC(1) sets out a number of prescriptive criteria relevant to an assessment of when a person is otherwise “fit and proper” to act as an agent in relation to taxation matters. But the subsection is not exhaustive and Davies J commented upon the width of the potentially relevant considerations in Re Su and the Tax Agents Board of South Australia (1982) 82 ATC 4282 at 4286-7. His Honour said:
The function of a tax agent is to prepare and lodge income-tax returns for other persons. A person is a fit and proper person to handle the affairs of a client if he is a person of good reputation, has a proper knowledge of taxation laws, is able to prepare income-tax returns competently and is able to deal competently with any queries which may be raised by officers of the Taxation Department. He should be a person of such competence and integrity that others may entrust their taxation affairs to his care. He should be a person of such reputation and ability that officers of the Taxation Department may proceed upon the footing that the taxation returns lodged by the agent had been prepared by him honestly and competently.
83.Davies J’s comments have an obvious similarity to the requirements of fitness and propriety that apply to a liquidator registered under Part 9.2 of the Corporations Act 2001. This is apparent from the judgment of the Full Court of the Federal Court of Australia in Albarran v Members of the Companies Auditors and Liquidators Disciplinary Board [2006] FCAFC 69; (2006) 151 FCR 466; (2006) 233 ALR 37; (2006) 59 ACSR 129; (2006) 24 ACLC 619. In that case, referring to the provisions for registration and cancellation in sections 1279 and 1292 of the Corporations Act 2001, the Full Court said:
[26] Plainly, Pt 9.2 of the Corporations Act is a statutory regime designed to limit those who are entitled to be, and hold themselves out as being, auditors and liquidators, to people who have the required professional skill and competence and who are otherwise fit and proper persons to occupy such positions. To call it a licensing regime is not to affix a label to the words of parliament; rather, it is to describe, with tolerable accuracy, the nature of the provisions in language adequate to describe certain types of governmental power. Parliament has given to the commission the task of attending to registration of auditors and liquidators. It has given to the board the task of deciding whether a person who has registration as an auditor or liquidator should have his or her registration cancelled or suspended. The circumstances in which this may occur for a liquidator (see 1292(2)) reflect the underlying necessary qualities for registration: skill, competence and being otherwise a fit and proper person to hold the position. The position, it is to be recalled, is one of some responsibility in the commercial community and in corporate life and administration, involving not only the requirements of probity and skill in dealing with commercial affairs, but also in dealings with courts whose work may encompass the affairs of companies.
84.It is implicit in the frequent statutory use of the “fit and proper” criterion that it is intended to serve a significant function in protecting the public interest in connection with the person’s conduct in undertaking the relevant activity. The concept of public protection involves at least two considerations. The first is a public interest in ensuring that the person does in fact follow the appropriate course of action in the future. The second is the public interest in ensuring confidence, so far as is reasonably possible, that the person can properly be entrusted to undertake the tasks that attach to the licensed activity or office involved: Re Wolstonecroft and Companies Auditors and Liquidators Disciplinary Board (1998) 54 ALD 773 at 785 [54]-[55].
85.The notion that the “fit and proper” criterion may properly involve consideration of matters of reputation, including an assessment of the rather abstract concept of “public confidence” has long been accepted, at least in the context of the admission and licensing of legal practitioners. In Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 655 at 681 Isaacs J described the relevant question as being entirely prospective and as requiring a satisfaction that the person was “worthy of public confidence” and was able to demonstrate their “worthiness and reliability for the future”. In Southern Law Society v Westbrook (1910) 10 CLR 609 O’Connor J referred to the “absolute confidence which the public must repose in person to fulfil the duties of solicitors” (although that was, of course, a case of misconduct by a solicitor). In similar vein, a relevant consideration in determining a person’s “fitness” may involve an assessment of the person’s ability, because of the tarnish to their reputation as a result of prior misconduct, to conduct their professional practice effectively in their dealings with other members of the profession: see the discussion in Law Society New South Wales v Foreman (1994) 34 NSWLR 408 at 444-445.
86.Neither is the question of “fitness” confined to a consideration of the impact of past misconduct. Ignorance or incompetence in relation to the matters to which the criterion applies is inconsistent with satisfaction that the person is fit and proper. Consequently, demonstrated incompetence provides an independent ground for removing the name of a legal practitioner from the roll: Pillai v Messiter (No 2) (1989) 16 NSWLR 197 at 201. Incompetence in this sense includes a relevant lack of understanding: Law Society of New South Wales v Moulton [1981] 2 NSWLR 736 at 740. It also includes carrying on a professional practice that significantly involves the pursuit of discredited theories or principles: Newbury v Dental Board of Victoria [2000] VSC 54.
87.Where the relevant authority is satisfied that the person is no longer “fit and proper” to retain their current licence or registration, and the criterion serves a purely protective function, the appropriate order is to remove their continuing qualification – either by cancellation or, depending on the existence of the relevant statutory power, indefinite disqualification. The purpose of such a course of action is to impose on the person the obligation to show affirmatively at some future time their relevant suitability: Rich v Australian Securities and Investments Commission (2004) 220 CLR 129; (2004) 209 ALR 271; per McHugh J at [42] - citing ASIC v Hutchings (2001) 38 ACSR 387 (directors disqualified for life but with the right to re-apply on three months notice after five years).
88.It is consistent with the protective purpose of the “fit and proper” criterion that the relevant assessment does not turn on an actual satisfaction that future irregularity is likely to occur in all, or even a significant number, of instances. It is implicit in the way in which the reported cases have dealt with the question that the satisfaction required is satisfaction that the person can be relied upon to act in a proper manner in all of the circumstances likely to occur in the ordinary course of the activities to which their registration or licence relates: see for example Health Care Complaints Commission v Lichfield (1997) 41 NSWLR 630 at 639. That assessment may necessarily be influenced by knowledge of past events. But the mere fact of past irregularity does not of itself necessarily indicate the relevant risk of a possible future transgression: Re Wall and Civil Aviation Safety Authority (1998) 28 ALD 154 (pilot contravening civil aviation regulations on one occasion).
89.The notion that either a person may fail to demonstrate they are “fit and proper”, or that a licensing authority may not be satisfied that they are, even in the absence of an apprehension of the actual probability of misconduct or relevant irregularity, is consistent with the relevance of public confidence referred to in the authorities cited above. That notion is arguably implicit in the dual criterion of both “fit” and “proper”. It is also consistent with the standards that may be required to be observed by the person in the proper conduct of the licensed activity. This is particularly relevant in relation to the conduct of a liquidator. The winding up of a corporation, particularly an insolvent corporation, is inherently likely to generate competing interests. Sometimes the competition may provoke complaints - about the liquidator’s partiality, competence or judgment. Where the complaints involve a challenge to the liquidator’s independence, the relevant issue is not so much one of their proven partiality but the importance of preserving the appearance of real independence in the interest of the public, the creditors and members of the corporation: re Biposto; Condon v Rogers (1995) 17 ACSR 730 at 734-736 - citing Re Allebart Pty Lt; Re Home Holdings Pty Ltd [1971) 1 NSWLR 24; Advance Housing Pty Ltd (in liq ) v Newcastle Classic Developments Pty Ltd (1994) 14 ACSR 230 at 232-234; Re Giant Resources Ltd [1991] 1 Qd R 107 at 117. In the latter case the Court said that a liquidator needs to be seen to be independent in any matter his duties as liquidator may require him to investigate. Substantially the same statement could have accurately been made in relation to all of the attributes required of a liquidator.
90.Against this background, which both emphasises the width of the “fit and proper” criterion and acknowledges the relevance of “capacity” (using that expression to include knowledge, qualification and competence) it is perhaps not surprising that there appears to be few reported cases dealing with the relevance of mental illness to an assessment of a whether a person is “fit and proper”. Nevertheless a person’s mental health is clearly potentially relevant to any proper assessment of their capacity.
91.In Re B (a solicitor) [1986] VR 695 Brooking J dealt with the question whether mental incapacity provided a proper basis for removing a solicitor’s name from the roll of admitted practitioners. The solicitor had been acquitted, on the ground of insanity, on a charge of shooting with intent to murder. He was still in custody when an application was made for his name to be removed from the roll of practitioners. Brooking J held that whilst the solicitor remained in custody, pending a determination by the Crown of his current mental health, it was appropriate to suspend the solicitor from practice. On the more general question as to whether proven current mental incapacity could justify an order removing a practitioner’s name from the roll His Honour said (at [1986] VR 699 and 702):
… it would be a serious error to suppose that the court’s power to strike off the roll is confined to cases of misconduct. No court would knowingly admit a lunatic to the practice of the law, for lack of mental capacity renders him unfit to enter the profession. It is altogether too clear to require the citation of authority, but let me refer to the examples given by Starke J and Dixon J in Re Davis (1947) and 75 CLR 409 at 418 and 424. …. if a lawyer who is mentally ill intends to practice his profession, or to make some indirect use of his status as a person admitted to practice, the protective jurisdiction may well have to be invoked against him. And if it is, the court will then consider, not whether he has been guilty of “misconduct”, but whether he is a proper person to be continued on the roll, whether “having regard to the circumstances” or “on the facts disclosed” or “for any reason” - phrases perfectly general – he is shown not to be a fit and proper person to practise the law; Re Weare [1893] 2 QB 439 at 448 per Lindley LJ; Southern Law Society v Westbrook (1910) 10 CLR 609 at 612 & 627; re Davis (1947) 75 CLR 409 at 416 & 427, 429; Ziems v The Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279 at 288 & 297-8.
…
In my opinion a legal practitioner may be struck off the roll or suspended if he is shown for any reason not to be a fit and proper person to practise the law. The ground may be misconduct. It may be mental unfitness to practise. It may be physical unfitness to practise. The ground may even relate to the situation in which the practitioner finds himself. For in my view a man’s situation - by which I mean the position in which he finds himself, as opposed to some aspect of his character or personality or physical or mental condition- may make him unfit to practise, or may at all events be taken into account in determining whether he should be regarded as unfit to practise.
92.In the light of the preceding general discussion, and fortified by the approach taken by Brooking J in Re B (a solicitor) [1986] VR 695 it is proper to conclude that Mr Sleiman’s psychotic illness is directly relevant to an assessment of whether he is “otherwise a fit and proper person to remain registered as a liquidator”. The question whether his illness leads to satisfaction that he is not fit and proper depends on a proper understanding of the duties and functions of a registered liquidator.
93.With exceptions that are immaterial for present purposes, only a registered liquidator can be appointed as a receiver, administrator or liquidator in the voluntary winding up of a corporation: Corporations Act 2001 sections 418, 448B and 532. Only an official liquidator may be appointed in the case of a court ordered winding up: Corporations Act 2001 section 472(2).
94.Registration of liquidators is provided for in Part 9.2 of the Corporations Act 2001. Section 1279(1)(b) provides that a natural person may make an application to the commission for registration as a liquidator. Section 1282(2) provides that ASIC must grant the application if:
(a) the applicant is a member of a professional accounting body, holds a degree, diploma or certificate from a prescribed institution or has other qualifications and experience that the commission considers equivalent;
(b) the commission is satisfied as to the experience of the applicant in connection with the winding up of bodies corporate; and
(c) the commission is satisfied that the applicant is capable of performing the duties of a liquidator and is otherwise a fit and proper person to be registered as a liquidator.
95.Where ASIC grants the application it must issue a certificate of registration to the person: Corporations Act 2001 section 1282(6). The person’s registration comes into force at the beginning of the day specified in the certificate and remains in force until the registration is cancelled by ASIC or the CALD Board or the person dies: section 1282(8).
96.A liquidator’s powers in a court ordered winding up are set out in section 477 of the Corporations Act 2001. There is a general power to do whatever is necessary for winding up the corporation’s affairs and distributing its assets. Subject to that purposive limitation, and any curial directions, the liquidator may carry on the corporation’s business to the extent that doing so is necessary for the beneficial realisation of the corporation’s assets.
97.The purpose of appointment of an administrator, as provided for in section 435A of the Corporations Act is either to maximise the chances of the company continuing in existence or to improve the distribution to creditors and members above what would result from an immediate winding up. While a company is under administration, an administrator has control of the company’s business, property and affairs. The administrator may carry on that business and manage that property and those affairs. Their powers include termination of the business or sale of any part of the corporation’s business or property. In general, the administrator may perform any function, and exercise any power, that the company or any of its officers could perform or exercise if the company were not under administration: see Corporations Act section 437A:
98.In Lofthouse v Australian Securities and Investments Commission (2004) 82 ALD 481; (2004) 22 ACLC 685; [2004] AATA 327 after a thorough review of all of the relevant legislative provisions, the Tribunal summarised the position of a liquidator and an administrator in the following passage:
… an examination of the roles of an administrator and liquidator (whether voluntary or court appointed) as revealed both in the Act, Regulations and Rules and the authorities shows that there is much similarity in their roles, duties and powers. A court appointed liquidator, for example, performs the functions and exercises the powers of the officers of the company and the company’s property is subject to his or her control. An administrator has the control of the company’s business, property and affairs and may perform the functions and exercise the powers of its office. There is little difference between the two but the end result of their efforts may or may not mirror each other. They must both prepare reports: an administrator’s report for the meeting of the company’s creditors must be prepared within five business days after 21 days after the administration’s commencement and a liquidator must lodge a report with ASIC within 2 months of his or her receiving a report of the company’s affairs from its officers and employees. The matters addressed in those reports are not identically expressed in ss 439A(4) and 476 of the Act but they cover the same substantive matters. An administrator and a court appointed liquidator both have the same duties under Pt 2D.1. They both must, for example, make any decision about the action taken in respect of a matter relevant to the business operations of the corporation in good faith for a proper purpose. Both must investigate past activities and report breaches of the Act or breaches of commercial propriety. In the case of an administrator, this is a statutory responsibility (s 438D) and in the case of a court appointed liquidator, it follows from his or her role as an officer of the court (see Re Allebart Pty Ltd (in liq) and the Companies Act, above) but the practical result is very similar. The court appointed liquidator’s role as an officer of the court means that he or she must properly and impartially discharge his or her duties as would a court or judge (Re Timberland (in liq) and Equitable Forestry Services Pty Ltd (in liq)) but that must also be expected of an administrator acting under his or her statutory responsibilities.
99.The functions and duties of a registered liquidator are clearly extensive. ASIC’s submissions emphasised there are many notice and reporting obligations with specific requirements of timeliness: see sections 436E and 439A (notices relating to meetings) 450A (notices relating to appointment), sections 38A and 438D (investigation and reporting). These are important obligations that require a degree of diligence and organisation on the part of the registered liquidator. Arguably more important, however, are the registered liquidator’s functions and duties in relation to the investigation of the corporation’s affairs and control of its business and property. In the case of administration the purposive requirements imposed by sections 435A and 438A may involve the administrator in the exercise of any or all of the powers of the corporation, powers that are fulsomely conferred on the administrator by section 437A of the Corporations Act 2001.
100.The exercise of those powers consistent with the statutory purpose requires knowledge, skill and sound judgment. The administrator is likely to be called on to display those qualities in situations of difficulty for the corporation. Those difficulties may involve conflict between creditors, members and officers. The conflicts may involve divergences of opinion about the best interests of the corporation and its members. It may involve some of the contending parties seeking to advantage their own interests in priority to those of the corporation, other creditors or members.
101.Within this potential climate of likely financial urgency and debated competing interests, the administrator must be able to command confidence as to their ability, judgment and impartiality. Unless an administrator can confidently be expected to display those qualities to the extent likely to result in obtaining the actual confidence of those with whom they deal, the statutory purpose of the administration procedure is placed at risk. Substantially the same risk applies, despite the different statutory purpose, where the registered person acts as a liquidator. This follows from the close similarity of the powers exercisable by both administrators and liquidators – as indicated in the passage from the judgment in Lofthouse that has been set out above.
102.It may be that, to some extent, Mr Sleiman could continue to function as a liquidator or administrator despite the ongoing effects of his psychotic illness. One can infer, at least from the fact that he apparently managed to continue in practice for some years after 2002, that he was generally able to display an appropriate level of competence. This is consistent with Dr Kossoff’s evidence that late onset schizophrenia is typically more “encapsulated” and less pervasively disabling than when it is manifested in a sufferer in their late teens and early twenties. It is also consistent with her opinion that Mr Sleiman is likely to have a relatively good ability to “compartmentalise” his illness so as to minimise the effects of his delusive and hallucinatory ideation.
103.But whatever might lie within Mr Sleiman’s inherent abilities in relation to the “compartmentalisation” of his illness, it is readily apparent from his evidence, both in the proceedings in the CALD Board, and in the Tribunal proceedings, that his present conduct is relevantly affected delusional ideation. The effects of his psychotic illness are far from “compartmentalised” and his conduct does not inspire confidence that his illness is unlikely to have any material impact on his ability to act properly, effectively and reliably as either a liquidator or administrator. Two factors, in particular, preclude a finding that Mr Sleiman is a fit and proper person, at least whilst his psychotic illness remains untreated and presents in the way described by Drs Kossoff and Virgona.
104.First of all, there is the fact that disordered thought, consequential upon the patient’s delusions and hallucinations, is a characteristic of schizophrenia and its effect is difficult to predict. This is the essential point that Dr Virgona made in his oral evidence. Dr Kossoff made a similar point in her oral evidence. She said that, despite some prospect of “compartmentalisation” in particular patients, it is generally not the case that a schizophrenic patient’s acute psychotic condition is confined in its effect to any particular factual setting. Both of the psychiatrists were firm in their opinion, based on the matters they identified in their reports and evidence, that the overt level of Mr Sleiman’s illness was inconsistent with his being able to perform the role of a liquidator or administrator in a proper fashion. Their opinions were based on their stated assumptions about the scope of the functions and duties those roles entail.
105.It may be correct to say that neither psychiatrist had, or could reasonably be expected to have, a complete familiarity with the actual scope of the duties and functions involved. But they did display awareness of their basic nature. This is especially the case in relation to Dr Virgona’s second report of 2 April 2007. In that report Dr Virgona referred to various parts of ASIC’s policy statement 186: External Administration: Liquidator Registration. The matters identified by Dr Virgona are broadly consistent with the obligations of a liquidator or administrator that have been outlined earlier in these reasons. In these circumstances the considered views of two very experienced psychiatrists one that Mr Sleiman’s cognitive functioning has to be regarded as unpredictable whilst his illness continues without successful treatment. Dr Virgona was unequivocal in his evidence. He said he expected that Mr Sleiman would face significant difficulties and be likely to have significant shortfalls in his professional performance every day.
106.The emphatic expert evidence of Drs Kossof and Virgona is complemented significantly by the second particular reason to conclude that Mr Sleiman is currently not a fit and proper person to remain registered as a liquidator. It is the extent to which his conduct in the proceedings before the CALD Board and in the review proceedings before the Tribunal demonstrates his lack of insight into his illness and illustrates the extent to which there is a material risk that his future professional conduct may be influenced, albeit unpredictably, by his psychotic illness.
107.It is not the case that Mr Sleiman has presented his delusional ideation as totally unrelated to his professional performance as a liquidator or administrator. Indeed, his 19 April 2005 statement and his 11 page 31 October 2006 letter put forward matters such as the implanted “inventory system” and the “intrusions” as relevant to an assessment of his performance as a liquidator. His delusional ideation therefore has some connection with his perception of his professional work. The connection is most direct in his assertion that the “soiling” of files is deliberate malicious conduct of “market players”. But he is elusively and unpredictably imprecise in his various attribution of this, and other less specific grievances to a range of influences including generalised corruption, racism within government, the Army, government generally and the supposedly community based “local area network”. All of this suggests a delusional ideation which is more or less pervasive, in the sense of making itself available as an explanation for a range of difficulties that have confronted Mr Sleiman in connection with his professional activities and status.
108.In my opinion Mr Sleiman’s reference to these matters, in his evidence to the CALD Board, his 31 October 2006 letter and in his evidence and submissions to the Tribunal provide a telling illustration of the very points made by Drs Kossoff and Virgona – that Mr Sleiman lacks insight into his illness and is prone to delusional ideation that has a quite unpredictable effect on his judgmental decision making. In its submissions ASIC referred to Mr Sleiman’s illness as depriving him of fitness in relation to what the Tribunal referred to in Lofthouse as the “more ephemeral quality of judgment”: Lofthouse paragraph [74]. This is an adequate shorthand expression, if it is understood as including an incapacity not just to adjudicate rationally and skilfully between alternative courses of action, but also an inability to assemble all relevant information, understand its true objective significance and effectively convey that understanding to others. So understood, that expression captures the principal reason why Mr Sleiman’s untreated psychotic illness currently renders him not a fit and proper person to remain registered as a liquidator.
THE TRIBUNAL’S ANSWERS TO QUESTION 1
109.In the light of the matters addressed above, the Tribunal answers the first questions posed for separate determination as follows:
109.1Mr Sleiman is suffering from a psychotic illness, paranoid schizophrenia, That illness
(i)Does not, on the basis of the evidence before the Tribunal, render him incapable of managing his affairs
(ii)Does result in his being not a fit and proper person to remain registered as a liquidator.
QUESTION 2 – WHETHER AND IF SO TO WHAT EXTENT, MR SLEIMAN IS SUFFERING FROM AN ILLNESS WHICH MATERIALLY IMPEDES HIS ABILITY TO PARTICIPATE EFFECTIVELY IN THE CONDUCT OF THE PROCEEDINGS?
110.A further question for separate determination is whether Mr Sleiman’s psychotic illness materially impedes his ability to participate effectively in the conduct of the proceedings. In paragraph 49 of these reasons I referred to Dr Virgona’s opinion that Mr Sleiman would be unlikely to be able to participate effectively in the proceedings. This was because he was likely to misinterpret evidence, because of his delusional ideation and would not have a true appreciation of what was happening. Dr Virgona’s opinion seems to me to have been borne out by Mr Sleiman’s conduct at the hearing on 16 April 2007.
111.As I pointed out earlier in these reasons (commencing in paragraph 67) on three occasions during the course of the hearing on 16 April 2007 Mr Sleiman seemed not to understand accurately the purpose and scope of the hearing. Furthermore, in his cross examination of Dr Virgona and Dr Kossoff, Mr Sleiman appeared to adhere to his delusional ideation and confirmed the significance of their evidence that he lacked any real insight into the nature of the illness from which he is suffering. This lack of insight gives rise to a significant concern.
112.The concern is that whilst Mr Sleiman continues with his illness untreated he lacks the insight and ability to explore meaningfully the extent to which his illness should be taken into account in an evaluation not only of his past conduct but also in relation to any assessment of his continuing registration. That concern is particularly real and troubling given Dr Virgona’s evidence about the unpredictability of the effect and impact of Mr Sleiman’s delusional ideation. It may be that the rational mind of an observer would struggle to perceive a basis for any relationship between particular findings made by the CALD Board (or contended for by ASIC in its Amended Statement of Facts and Contentions) and one or other of the reported symptoms of Mr Sleiman’s illness. But this possibility merely re-states the potential difficulty rather than overcomes it.
113.There are good reasons to suspect that Mr Sleiman’s illness has been symptomatic since at least Dr McMahon’s 6 August 2004 letter referring him for a psychiatric consultation, and possibly since before his presentation to the Royal North Shore Hospital in July 2003. In these circumstances, whilst there is objective material to suggest that a proper understanding of Mr Sleiman’s past conduct requires a proper understanding of the nature and extent of his illness at the relevant time, Mr Sleiman’s untreated illness precludes him from having the insight necessary to address that aspect of the matter. It compounds the significance of the general point made by Dr Virgona, that Mr Sleiman’s psychotic illness makes him likely to misinterpret evidence and not have a true appreciation of what was happening in the proceedings.
114.In the light of the matters set out in the preceding paragraph the Tribunal answers the second question posed for separate determination as follows
114.1Mr Sleiman is suffering from a psychotic illness, paranoid schizophrenia that is likely to impede materially his ability to participate effectively in the conduct of the review proceedings.
QUESTION 3 – WHETHER AND IF SO TO WHAT EXTENT, MR SLEIMAN IS SUFFERING FROM AN ILLNESS WHICH MAY BE EXACERBATED OR PROLONGED BY THE CONDUCT OF THE REVIEW PROCEEDINGS?
115.The third of the questions posed for separate determination was whether Mr Sleiman’s illness is likely to be prolonged or exacerbated by the conduct of the proceedings. Dr Virgona addressed this question in his 13 March 2007 report. On the one hand Dr Virgona thought that Mr Sleiman’s presence at the hearing may not have a particularly deleterious effect. There appear to have been two reasons that influenced Dr Virgona to this assessment. The first is the apparently chronic nature of Mr Sleiman’s illness. Second, the nature of the illness may result in Mr Sleiman continuing to interpret events in a deluded and distorted way that does not give rise to any additional stress and does not exacerbate his illness.
116.However, Dr Virgona went on to say that it would not be to Mr Sleiman’s advantage for him to give extensive evidence or be interrogated for very long. Dr Virgona considered that such a process would add significant stress and would be likely to result in further deterioration of Mr Sleiman’s mental state.
117.The proceedings before the CALD Board occupied 3 days of hearing in December 2005. Afterwards the parties exchanged written submissions. Further supplementary submissions were provided some 5 months later. At this stage, of course, the proceedings did not include any of the many additional matters that ASIC now proposes to rely on its Amended Statement of Facts and Contentions – and to which I referred in paragraph 7 above. Any Tribunal hearing that includes those matters is likely to substantially broaden the matters on which Mr Sleiman is likely to give evidence, and be cross examined. The hearing time appears likely to be substantially greater than the hearing time taken in the proceedings before the CALD Board. The likelihood of increased time and complexity of the review proceedings increases the risk of deterioration in Mr Sleiman’s mental health.
118.Accordingly the Tribunal answers the third question posed for separate determination as follows:
118.1Mr Sleiman is suffering from a psychotic disease that is likely to be exacerbated or prolonged by the conduct of the review proceedings – assuming they include all of the matters relied on in ASIC’s Statement of Facts and Contentions and are conducted by way of a continuous hearing involving all those matters.
QUESTION 4 – SHOULD THE TRIBUNAL GIVE A DIRECTION UNDER SECTION 25(4A) OF THE AAT ACT?
119.The remaining question posed for separate determination and set out in paragraph 15 above was whether the Tribunal should exercise the power conferred by s 25(4A) of the AAT Act to determine the scope of the review proceedings by limiting the issues in various ways. At the conclusion of the hearing on 16 April 2007 ASIC submitted that it was preferable to address this question after the Tribunal provided answers to the earlier other questions. The Tribunal accepts that submission.
SUMMARY OF ANSWERS TO QUESTIONS
120.The Tribunal’s answers to the questions posed are as follows
120.1Mr Sleiman is suffering from a psychotic illness, paranoid schizophrenia, that illness
(i)Does not, on the basis of the evidence before the Tribunal, render him incapable of managing his affairs
(ii)Does result in his being not a fit and proper person to remain registered as a liquidator.
120.2Mr Sleiman is suffering from a psychotic illness, paranoid schizophrenia that is likely to impede materially his ability to participate effectively in the conduct of the review proceedings.
120.3Mr Sleiman is suffering from a psychotic disease that is likely to be exacerbated or prolonged by the conduct of the review proceedings – assuming they include all of the matters relied on in ASIC’s Statement of Facts and Contentions and are conducted by way of a continuous hearing involving all those matters.
121.Once the parties have had an opportunity to consider the Tribunal’s answers to the questions they should have the review proceedings listed for further directions in relation to their further hearing.
I certify that the 121 preceding paragraphs are a true copy of the written reasons for the decision herein of Mr P W Taylor SC, Senior Member.
Signed: [sgd] Mwela Kapapa
AssociateDate of Hearing 16 April 2007
Date of Decision 29 May 2007
Appearance for Applicant Self-represented
Counsel for the Respondent Mr G P McNallyAdvocate for the Respondent Ms S L Breton
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