Somerville, H.R. v Australian Securities Commission

[1993] FCA 700

700 193

JUDGMENT NO. .. .n . . . . .a***-

IN THE FEDERAL COURT OF AUSTRALIA

No VG 188 of 1993

VICTORIA DISTRICT REGISTRY	No VG 190 of 1993 No VG 205 of 1993
GENERAL DIVISION
B E T W E E N :

HUGH ROSS SOMERVILLE AND OTHERS

Applicants

A N D :

AUSTRALIAN SECURITIES COMMISSION AND OTHERS

Respondents

COURT :	NORTHROP J
PLACE :	MELBOURNE
DATE :	23 AUGUST 1993

FEDERAL WURT OF

AUSTRALIA PRINCIPAL

REASONS FOR JUDGMENT REQISTRY

On 5 August 1993 motions on notice raising the same issue were heard concurrently in each of these proceedings. At the conclusion of the submissions, the Court made orders disposing of those motions but announced it would publish its reasons for making those orders at a later date. The Court now publishes those reasons.

Australian Securities Commission Act 1989 (the "ASC Law").	The Commission is constituted, for present purposes, by three
persons, see s9, who, at all relevant times were and are Alan John Cameron, the Chairperson, Charles Morrice Williams, the Deputy Chairperson, and William John Robinson, a member. In these reasons, these three persons are referred to as "the Commissioners".
The Supreme Court ction was begun, and is being carried on, by the Commission l rsuant to the powers conferred by s50
of the ASC Law. That s ction is set out in full: 3"

In each proceeding the applicant has been named as a defendant in an action in the Supreme Court of Victoria, being No 2045 of 1993 F3968. That action was commenced on 23 March 1993. That action was begun, and is being carried on, by the Australian Securities Commission ("the Commission"). The Commission is a body corporate constituted under the

"50 Where, as a result of an investigation or from a

record of an examination (being an investigation or examination conducted under this Part or a corresponding law), it appears to the Commission to be in the public interest for a person to begin and carry on a proceeding for:

(a) the recovery of damages for fraud, negligence, default, breach of duty, or other misconduct, committed in connection with a matter to which the investigation or examination related; or

(b) recovery of property of the person;

the Commission:

(c) if the person is a company - may cause; or
(d)	otherwise - may, with the person's written consent, cause;

such a proceeding to be begun and carried on in the
person's name."

It is not necessary to express any final view on the proper construction and application of that section in order to determine the motions before the Court. It appears, however, that under that section, before the Commission is empowered to cause a proceeding of the type specified in the section to be begun and carried on in a person's name, it must appear to the Commission to be in the public interest for the person to begin and carry on a proceeding of that type. Thus, it appears that the section identifies at least two decisions, the first being the formation of the view encompassed by the words where "it appears to the Commission" and the second being the decision to cause the proceeding "to be begun and carried on" in the person's name. The Court does not need to consider whether the words "to be begun and carried on" apply to one decision or, as some of the counsel contended, apply to a multitude of decisions affecting every step in the proceeding. Further, for present purposes, no issue was raised in relation to any investigation of the type referred to in the section. For present purposes it is sufficient to say that the investigation arose out of the collapse of the Pyramid and Farrow group of companies in Victoria.

In each of the applications presently before this Court,

the applicant is seeking an order of review under the

Administrative Decisions I Judicial Review) Act 1977 (the	"Judicial Review Act") to review a number of the decisions
made by the Commission pursuant to the powers conferred upon it by 650 of the ASC Law with respect to the Supreme Court action.
In proceeding VG No 188 of 1993, the applicant, Hugh Ross Somerville, a defendant in the Supreme Court action, has named the Commission and each of the Commissioners as a respondent.
M r Somerville is seeking relief against each of the
Commissioners under one or more of the provisions of the Judicial Review Act, s39B of the Judiciarv Act 1903 and under the accrued jurisdiction of this Court.

In proceeding VG I No 190 of 1993, the applicant AN2

Executors and Trustee C? Ltd, a defendant in the Supreme Court

action, has named the ommission only as a respondent. The

AN2 Executors and Trust e CO Ltd is seeking relief against the F

Commission under the Judicial Review Act. '7

In proceeding VG No 205 of 1993 the applicant, Day Nielson Jenkins & Johns, a firm and a defendant in the Supreme Court action, also has named the Commission only as a respondent. The firm is seeking relief against the Commission under the Judicial Review Act.

Under s102 of the ASC Law, the Commission has power to delegate all or any of its functions and powers under the

to a person. The person to whom powers are so delegated

is often referred to as a delegate. The relevant parts of

s102 are set out:

"102.(1) The Commission may, by writing under its common

seal, delegate to a person all or any of its functions

and powers.

Minister's approval, delegate a function or power to a	( 2 ) The Commission shall not, without the
person other than:

(a) a member;
(b) a staff member; or

a power, delegated under this section, the delegate is	( 5 ) In the performance of a function, or the exercise of
subject to the Commission's directions.
(6) Where a function or power conferred on the
Commission by or under a law (including this Law) and delegated under this section is performed or exercised by the delegate, it shall, for the purposes of that law and this Law, be deemed to have been performed or exercised by the Commission.

Peter Chapman and Ailsa Wilson, are staff members of the Commission. In these reasons, these two persons are referred to as "the Delegates". The Commission, pursuant to the powers conferred upon it by 6102 of the ASC Law, has delegated powers under s50 of the ASC Law to each of the Delegates. After the Commission made its decision to begin and carry on the Supreme Court action, each of the Delegates made decisions under 650 of the ASC Law with respect to the Supreme Court proceedings against each of the applicants. These decisions involved

adding other persons as plaintiffs in Supreme Court Act No	2045 of 1993, F3968. Those decisions affect each of the
applicants. Under sub-section 102(6), each of those decisions, insofar as it was made pursuant to the exercise of delegated powers, is "deemed to have been ... exercised by the Commission." Further, subsequent to the decisions so made by the Delegates, the Commission has ratified each of those decisions. Each of the applicants seeks to challenge, under the Judicial Review Act and s39B of the Judiciarv Act, each of the decisions made by the Delegates, including the nature of the power so delegated to each of them. Neither of the Delegates, at present, is named as a respondent to any of the three applications before the Court.
The substance of each of the motions heard and determined by the Court on 5 August 1993 is set out:
Proceedina No VG 188 of 1993
A motion by the Commission on notice dated 11 June 1993 that the application be dismissed as against each of the Commissioners. This motion is based upon 0 11 r 16 and
0 20 r 2 of the Federal Court Rules, namely that no reasonable
cause of action is disclosed against the Commissioners.
A motion by the applicant on notice dated 28 July 1993 that pursuant to 0 6 r 8 the Delegates be added as respondents and that consequential leave be granted to amend the application accordingly.

The Commission has not given any notice of objection to

competency pursuant to 0 54 r 4.

Proceedina No VG 190 of 1993

A motion by the applicant on notice dated 2 August 1993 that pursuant to 0 6 r 8 the Commissioners and the Delegates be added as respondents and that consequential leave be granted to amend the application accordingly.

The Commission has not given any notice of objection to competency pursuant to 0 54 r 4.

Proceedina No VG 205 of 1993

A motion by the applicant on notice dated 28 July 1993 that pursuant to 0 6 r 8 the Commissioners and the Delegates be added as respondents and that consequential leave be granted to amend the application accordingly.

The Commission has not given any notice of objection to competency pursuant to 0 54 r 4.

Each of these motions raise the same issue. It is accepted that before the Court will dismiss an application against named respondents under the powers conferred by the Rules under 0 11 r 16 or 0 20 r 2, the Court must be satisfied that the claim against the respondents has no hope of succeeding; see General Steel Industries Inc v Commissioner for Railwavs (NSWL (1964) 112 CLR 125 per Barwick C at 128-

logical that a similar principle should be applied before	130. The Court applies that principle here. Likewise, it is
adding respondents to an existing application. Under 0 6 r 8 the Court has power to order that a person be added as a party, including a respondent, when that person is not a party but whose joinder as a party is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon. In this respect, it is accepted that it is desirable that all persons should be
parties to an application in which common questions of law or of fact arise, c/£ 0 6 r 2. However, it would be futile to order persons to be added as respondents if those persons would be entitled to orders under 0 11 r 16 or 0 20 r 2. Accordingly, the principles enunciated in General Steel Industries should be applied in considering each of these motions.
The issue raised in relation to the Commissioners can be considered on the motion by the Commission. In each of the applications, the applicants are seeking an order of review of a number of decisions made by the Commission under the m Law. The applicants are seeking orders under the Judicial Review Act. Under s13 of that Act, the applicants have requested the Commission to give reasons for the decisions sought to be reviewed. The Commission has not given these reasons. The Commission may not be required to give reasons. That issue is not before the Court. The applicants want to go further. They want to seek an order of review of decisions
made by the Commissioners in deciding that the Commission make the decisions under s50 of the ASC Law. In other words, the
applicants are seeking to go beyond the corporate veil of the Commission and challenge the decisions of its members, in their capacity as members of the Commission. It must be remembered, however that a decision of the Commissioners is not the decision of the Commission, the decision of the Commission, as a corporation, being separate and distinct from the decisions of the Commissioners. The decisions of the Commission may be subject to an order of review. However, in my opinion, the decisions of the Commissioners, when acting as the Commission, cannot be made the subject of an order of review under the Judicial Review Act. Any claim to the contrary can have no hope of success.
The applicants contend, further, that they could seek a writ of mandamus on prohibition or an injunction against the Commissioners under s39B of the Judiciarv Act. It can be accepted, for present purposes, that each of the Commissioners is an officer of the Commonwealth within the meaning of that section. But the question that is raised is what power or duty of the Commissioners is being sought to be reviewed by proceedings under s39B of the Judiciarv Act. The only powers or duties suggested are those exercised in their capacity as members of the Commission as a result of which the Commission made decisions under s50 of the ASC Law. Those decisions of the Commission are being reviewed under the Judicial Review Act. In the course of those proceedings, the actions of the Commissioners will be under scrutiny. It almost constitutes an abuse of the process of the Court to seek relief against
the Commissioners, in these circumstances, under s39B of the Judiciarv Act. Counsel could not point to any cause of action against the Commissioners which could found the claim under s39B except the actions under the processes leading to the making of the decisions of the Commission sought to be reviewed under the Judicial Review Act. The claims based on s39B of the Judiciary Act cannot possibly succeed.
The claims against the Delegates come within a different category. Under subsection 102(6) of the ASC Law, a power exercised by a delegate is deemed to have been exercised by the Commission, but nevertheless, in the exercise of the delegated power, the delegate has made a decision. It can be accepted that the decision may be deemed to be the decision of the Commission, made, in this case, under s50 of the ASC Law. But all this means is that the decision of a delegate is to have the same effect as if it were a decision of the Commission. Nevertheless, a number of issues may be raised with respect to the decisions by the Delegates. These may include the nature of the powers delegated, the extent of those powers and whether the delegate has properly exercised those powers. These are all separate and distinct from the exercise of the power, whether deemed or direct, of the Commission under s50 of the ASC Law. Prima facie, the decisions of the Delegates are capable of being made the subject of orders of review under the Judicial Review Act. Further, in exercising their functions and powers as
may be subject to proceedings under s39B of the Judiciarv Act delegates, the Delegates are officers of the Commonwealth and
to determine whether those functions and powers have been exercised properly. Further, nice questions arise in relation to the ratification of the decisions made by the Delegates by the subsequent action of the Commission. All these factors support the view that the Delegates should be added as respondents in each of the applications. This does not suggest that the Court has formed any view as to the validity of the claims so made.
At some stage of the submissions, some of the counsel for the applicants suggested that the Commissioners and the Delegates could be joined as respondents because of claims against them based upon the accrued jurisdiction of the Court or by cross vested jurisdiction. These submissions were not pressed and are rejected.

In the result, the Court made the following orders:

Proceedina No VG 188 of 1993

1.   The application against the respondents Alan John Cameron, Charles Morrice- Williams and William John Robinson be dismissed with costs.

1. The applicant have leave to add Peter Chapman and Ailsa Wilson as respondents.

3.    Costs of the applicant's motion be reserved.

Proceedina No VG 190 of 1993

1. The applicant have leave to add Peter Chapman and Ailsa Wilson as respondents, otherwise the motion to add respondents be refused.

2.    Costs of the applicant's motion be reserved.

Proceeding No VG 205 of 1993

1. The applicant have leave to add Peter Chapman and Ailsa Wilson as respondents, otherwise the motion to add respondents be refused.

2.    Costs of the applicant's motion be reserved.

Consequential orders will need to be made concerning the leave to amend each application.

As indicated at the time the orders were made, all parties have leave, if required, to appeal from the orders made. The time for filing any notice of appeal is extended to 21 days from the date of publication of these reasons.

After making the orders, the Court proceeded to hear other motions on notice in each of the applications.

true copy of the Reasons for Judgment of The Honourable M r	I certify that this and the preceding eleven (11) pages are a
Justice R.M. Northrop.
Associate:  ( g % t Q J ( e