VCA v Australian Prudential Regulation Authority

Abichandani and Australian Securities and Investments Commission [2016] AATA 879 (8 November 2016)

Division

Taxation and Commercial Division

File Number(s)

2015/5994

Re

Manoj Abichandani

APPLICANT

And

Australian Securities and Investments Commission

RESPONDENT

DECISION

Tribunal Mr P W Taylor SC, Senior Member

Date 8 November 2016

Place Sydney
The decision under review - the ASIC disqualification decision of 30 October 2015 - is set aside. In substitution I decide that the applicant is not disqualified from being an approved SMSF auditor.

........................[sgd]................................................
Mr P W Taylor SC, Senior Member
CATCHWORDS
DISQUALIFICATION – registered SMSF auditor – “fit and proper person” – audits signed by applicant – whether audits were done by the applicant – ASIC’s findings and submissions of misleading and deceptive conduct – assertions of false evidence in the course of proceedings – applicant found to be a fit and proper person – decision set aside
LEGISLATION
Administrative Appeals Tribunal Act 1975, s 2A, s 31(1AB)
Superannuation Industry (Supervision) Act 1993, s 3(1), s 6(1), s 35C(1), s 128, s 128D(1), s 128P, s 130F(2), s 344
Superannuation Industry (Supervision) Regulations 1994
Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Act 2012
CASES
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Brown v Jam Factory Pty Ltd (1981) 53 FLR 340
Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592
Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304; (2009) 257 ALR 610
Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45
Claudius Ash & Co Ltd v Invicta Manufacturing Co Ltd (1911) 28 RPC 597
Equity Access Pty Ltd v Westpac Banking Corporation (1990) ATPR 40-994
Gipps v Gipps [1978] 1 NSWLR 454
Hughes & Vale Proprietary Ltd v State of New South Wales (No 2) (1955) 93 CLR 127
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
Smith v NSW Bar Association (1992) 176 CLR 256
MacKenzie v The Queen (1996) 190 CLR 348
VCA v Australian Prudential Regulation Authority [2008] AATA 580
Ziems v The Prothonotary (1957) 97 CLR 279
SECONDARY MATERIALS
Explanatory Memorandum, Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Act 2012
Legal Profession Uniform Conduct (Barristers) Rules 2015, rule 64, rule 65
Regulatory Guide 243 – Registration of self-managed superannuation fund auditors
REASONS FOR DECISION
Mr P W Taylor SC, Senior Member
8 November 2016

Mr Abichandani holds various bachelor degrees in commerce and accounting. He has been a superannuation fund auditor since 1995, and a member of the National Institute of Accountants since at least April 2005. Since 2009 he has been a technical consultant, relating to self managed superannuation fund (“SMSF”) issues, to a private company that provides online legal document delivery and management services. Following legislative amendments made by the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Act 2012, he became registered as an approved SMSF auditor, under the Superannuation Industry (Supervision) Act 1993 (“SIS Act”) - s 128B.
In May 2014 the Commissioner of Taxation, exercising the permission granted by SIS Act s 128P, referred to ASIC details of Mr Abichandani’s conduct in relation to the audit of three SMSF funds for the financial ended June 2011. (ASIC is the “regulator” under the relevant SIS Act provisions - see ss 3(1), 6(1) 35C(1).) As a result of that referral, and in the exercise of the power contained in SIS Act s 128D(1), on 1 September 2015 ASIC imposed conditions on Mr Abichandani’s approved auditor registration. One of those conditions required Mr Abichandani to submit three of his 2015 financial year SMSF audits for independent evaluation and report.
On 7 September 2015 Mr Abichandani, relying on the procedural permission contained in SIS Act s 344, sent ASIC an email asking it to remove the independent evaluation condition. He set out five grounds for his request. One of them involved a statement that the three ATO referred audits “were not done by me”. (Mr Abichandani had made a similar statement - “that the audits were done by Mr … Vadher” - in an earlier email to ASIC on 21 August 2015.) But in response to ASIC’s concern, on 18 September 2015, Mr Abichandani conceded that his statement was incorrect, and withdrew his request to remove the independent evaluation condition.
On 1 October 2015, acting under SIS Act s 130F(2), ASIC disqualified Mr Abichandani from being an approved SMSF auditor, with effect from 8 October 2015. In the light of the conceded inaccuracy of Mr Abichandani’s August and September 2015 statements, ASIC was “not satisfied that he did not intend to deceive or mislead ASIC”. ASIC opined that he “knew, or ought to have known” the statements were misleading. ASIC ultimately expressed a positive conclusion that his statements were “untruthful and misleading”. ASIC then determined that the statements demonstrated Mr Abichandani was not fit and proper for registration as an SMSF auditor. (There are seven grounds on which ASIC can make a disqualification decision under SIS Act s 130F(2). One ground is that the person is not “fit and proper to be an approved SMSF auditor”: see SIS Act s 130F(2)(d).)
ASIC maintained the disqualification in its 30 October 2015 reconsideration decision. That decision is the subject of Mr Abichandani’s review application in the present proceedings.
THE ASIC RECONSIDERATION DECISION
In its 30 October 2015 decision ASIC accepted the probability that Mr Vadher (the person Mr Abichandani named in his August 2015 email) had undertaken the bulk of the audit work for the three ATO referred audits. It also accepted that Mr Abichandani’s role had mainly involved supervision of that work, and the signing of the various formal audit documents. However ASIC also concluded that even such a supervisory and execution role would have required Mr Abichandani to have had a detailed understanding of the audit work and findings. This was because he had personal responsibility for the findings expressed in each of the three audit reports.
ASIC’s reconsideration decision reasons then went on to conclude that Mr Abichandani had made two false statements. The two statements identified in the reconsideration decision were:
(a)21 August 2015 email:- “I am surprised to find that ASIC ignored the statement in which I clearly mentioned in my letter to the ATO that the audits were done by Mr Sanjay Vadher - ASIC approved SMSF auditor - who was paid for these audits - however my name was used in the income tax returns”.
(b)7 September 2015 email:- “The audits which the ATO audited and reported were not done by me, they were done by another ASIC approved SMSF auditor, and however my name was used on the income tax return at that time to which I did not object within a stipulated time. I was a minor partner in that accounting firm which prepared the financial statements of those funds. I have since sold my share in that accounting firm.”
As the preceding extracts show, in neither statement did Mr Abichandani dispute the fact that he had signed the audit reports themselves. Notwithstanding that fact, and its acceptance of the reality of both Mr Vadher and Mr Abichandani’s respective roles in the three contentious audits (see paragraph 6 above), ASIC’s reconsideration reasons concluded that Mr Abichandani made each of these statements “for the purpose of causing ASIC to erroneously accept [he] had no understanding of the audit work… and...findings”. ASIC further concluded that Mr Abichandani’s reference to a letter to the ATO disclosing Mr Vadher’s audit involvement was also a “false representation”, and that it was made for the purpose of deterring ASIC from taking steps in relation to Mr Abichandani’s audit registration. ASIC thought the two express statements in his emails could not be taken as an aberration or an isolated incident. Instead they were, in ASIC’s view, a deliberate attempt to mislead it. ASIC thought, after having regard to paragraph 29 of the Regulatory Guide 243 Registration of self-managed superannuation fund auditors, that this finding, involving a deliberate attempt to mislead a regulatory body, precluded satisfaction of Mr Abichandani’s integrity, and consequently precluded satisfaction that he was a fit and proper person to be approved as an SMSF auditor.
FIT AND PROPER
The “fit and proper person” criterion is one of imprecise denotation. Its connotations allow a broad range of permissible considerations, and an impressionistic discretionary judgment, albeit one directed at the nature and purpose of the functions or entitlements to which the judgment is material: Hughes & Vale Proprietary Ltd v State of New South Wales (No 2) (1955) 93 CLR 127 at 156 per Dixon CJ, McTiernan and Webb JJ. It includes technical competence and ability, especially where the assessment relates to an activity requiring special training or qualification. But it extends, usually permissibly, and often necessarily, to include consideration of character, integrity and repute. The reason for this extension is explained in the following passage in the joint judgment of Toohey and Gaudron JJ in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 380.
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 public perception as to 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.
In the particular context of the SIS Act, this Tribunal has previously said that the “fit and proper person” criterion requires that the auditor has the “skills judgment and application to know” to do the “right thing”: VCA v Australian Prudential Regulation Authority [2008] AATA 580 at [529]. When the criterion has to be applied in the evaluation of an auditor whose conduct has given rise to contention about their qualification for registration, the assessment must have regard to the particular circumstances in which the conduct occurred, the person’s subsequent (or underlying) attitudes to that conduct, and the significance of any risk of its repetition: see generally VCA v Australian Prudential Regulation Authority [2008] AATA 580 at [537] - [543].
In the particular circumstances of the present matter, ASIC emphasised in its submissions the permissibly relevant considerations suggested in its own (January 2013) Regulatory Guide 243 - Registration of self-managed superannuation fund auditors (at paragraphs 243.28 - 243.30). Those paragraphs of the Regulatory Guide effectively adopted the substance of paragraph 2.29 of the Explanatory Memorandum to the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Act 2012. That paragraph was as follows:
2.29 A prescriptive approach cannot be applied to such a determination. ASIC must make a decision as to whether a person is fit and proper to be an approved SMSF auditor based on an evaluation of all the particulars of each case. However, relevant considerations in determining whether a person is a fit and proper person to be an approved SMSF auditor may include whether the person:
·has carried out or performed adequately and properly, the duties and functions of an approved SMSF auditor;
·has been or is currently subject to disciplinary action, including, but not limited to, suspension and exclusion from practice, by a regulatory body or a professional association;
·has been or is currently disqualified or banned under provisions of an Act or legislative instrument under Commonwealth, state or territory law;
·has been or is currently the subject of administrative, civil or enforcement action, which were determined adversely (including consenting to an order or direction, or giving an undertaking not to engage in unlawful or improper conduct) in any country;
·has been convicted or have legal proceedings pending for any criminal offences, any acts of dishonesty (such as theft or fraud), any breach of trust or fiduciary duty, any professional misconduct or other misconduct;
·has served a term of imprisonment;
·has been obstructive, misleading or untruthful in dealing with regulatory bodies, or a court;
·has failed to deal with conflicts of interest appropriately; or
·has or has had the status of undischarged bankrupt or insolvent under administration, or there is any such action pending.
The above matters are not meant to be an exhaustive list. The relevance and weighting given to these considerations (or any other relevant factors) may vary according to each person’s circumstances, and no one factor will be determinative in all cases. ASIC may provide further guidance in determining whether a person is fit and proper.
Prior to its 1 October 2015 disqualification decision ASIC had not regarded the ATO’s criticisms of Mr Abichandani’s audit conduct (criticisms which he has disputed with both the ATO and ASIC) as providing a ground for concluding that he was not a fit and proper person. The disqualification decision reasons did not themselves rely on any substantive criticism of Mr Abichandani’s audit qualifications, competence or conduct. Nor, with the limited exception of a complaint that he had “backdated” the Iceman audit report he provided to the ATO (see paragraph 85 below), did ASIC raise any such criticism in its submissions in the present proceedings. Indeed, ASIC at no stage challenged, nor disputed the apparent significance of, Mr Abichandani’s claims that (i) since 2008 he had conducted lectures and seminars on SMSF auditing “all over Australia”, (ii) he was the author of an online SMSF audit program that had been favourably reviewed by various professional accounting bodies and used in tens of thousands of SMSF audits from 2013 onwards, and (iii) he had successfully completed various specialist SMSF auditing courses conducted by the SMSF Association of Australia. ASIC acknowledged that in late 2014 Mr Abichandani had voluntarily sat and passed an SMSF auditor competency examination.
In the review proceedings ASIC focussed on the expression I have indicated in bold in the extracted passage from the 2012 Explanatory Memorandum. ASIC’s primary submission adhered to the characterisation of his 21 August 2015 and 7 September 2015 statements as dishonest and intentionally misleading. ASIC articulated this characterisation, both in written and oral submissions, in the contention that Mr Abichandani had intentionally and dishonestly sought to represent and convey to ASIC that he “had no meaningful role in” the contentious audits (oral submissions), and “no understanding of the audit work that had been undertaken and the findings made as a result of that audit work” (written submissions of January 2016).
ASIC’s alternative submission in the review proceedings was that Mr Abichandani’s statements were relevantly “obstructive”. Finally, in the course of its closing submissions, ASIC submitted that, in the course of his cross examination in the present proceedings Mr Abichandani had given knowingly false evidence to this Tribunal. The statement which ASIC asserted merited this characterisation was a definite and explicit claim that in a letter to the ATO Mr Abichandani had informed the Commissioner of Mr Vadher’s involvement in the three contentious audits.
THE GRAVITY OF ASIC’S FINDINGS AND SUBMISSIONS
ASIC’s primary findings, and the submissions it pursued in the review proceedings, explicitly characterised Mr Abichandani as having made knowingly false statements for the purpose of misleading it in the exercise of its statutory functions. Those findings and submissions involved unambiguous assertions of fraud. This characterisation specifically applies to the additional complaint that Mr Abichandani gave knowingly false evidence in the course of the present proceedings.
Courts of the highest authority have cautioned, more than once, against forensic enthusiasm for allegations of deliberate dishonesty, particularly testimonial dishonesty and most particularly of all, testimonial dishonesty in proceedings concerning professional qualifications or status. Two graphic examples are provided by the High Court’s decisions in Smith v NSW Bar Association (1992) 176 CLR 256 and MacKenzie v The Queen (1996) 190 CLR 348.
In MacKenzie the High Court set aside a perjury conviction that had been based on the witness’ dogmatic and emphatic assertion about facts that were demonstrably contradicted by objective evidence. In their joint judgment Gaudron, Gummow and Kirby JJ acknowledged that the dogmatic content and manner of the witness’ contentious evidence had “left little possibility of his being mistaken”. Nevertheless, their Honours cautioned, in the strongest terms, against conflating honesty and accuracy, and explained the reason for the caution. Their Honours said this (in the passages at 190 CLR 348 at 373-4 - from which I have omitted the irrelevant footnoted citations, and made one [interpolation]):
… many of the problems which have arisen in respect of identification evidence have occurred not because witnesses have deliberately given false evidence to police, and later to courts, but because it is an elementary feature of human psychology, in the words of the character witness in this case, to carry “a true mistake … through with … conviction”. The mind, recognising perhaps the seriousness of the consequences of error, may seek unconsciously to reinforce conviction of the truth and accuracy of the recall, the subject of the testimony. This can lead to just such risks of dogmatism and certainty that have occasioned the requirements for court warnings in the case of identification evidence so as to prevent the risks of the miscarriages of justice which can otherwise, quite innocently, occur in that context. But the point made in the identification cases is one of general application. It applies in relation to recall of perceptions required months or (as in this case) years after events: especially where those events were brief and seemingly unremarkable at the time they occurred.
… the appellant's repetition …. of his conviction of certainty as to the evidence he was giving was equally consistent with the giving of false evidence innocently and mistakenly as distinct from the giving of such evidence dishonestly and with criminal intent. Neither the repetition nor the expressed certainty nor the belated [possible explanation] are inconsistent with the hypothesis of innocent mistake. Sometimes repeated assertion of false evidence can tend to establish the criminal intention of the witness, especially where the falsity is “inescapable and self-evident” or where it leaves no reasonable cause for a belief that it is true. But honest mistake, inadvertence, carelessness or misunderstanding leading to evidence shown to be false will not constitute perjury for which a criminal intention must always be proved. In R v Dickson ([1983] 1 VR 227 at 231) it was rightly said:
[I]t is essential to distinguish between honesty and accuracy and not assume the latter because of belief in the former.
The converse is also true.

In Smith the New South Wales Court of Appeal had made a finding that a barrister gave knowingly false evidence in the course of disciplinary proceedings. In overturning this finding the High Court emphasised the fundamental distinction between, on the one hand, evidence that was unreliable and, on the other, evidence that was knowingly untrue. Justices Brennan, Dawson, Toohey and Gaudron forcefully pointed out (at 176 CLR 268) that “as a matter of logic and common sense, something more than mere rejection of a person’s evidence is necessary before there can be a positive finding that he or she deliberately lied in the giving of that evidence”. Their Honours then continued on with the following observation:
It is particularly important in disciplinary cases, where the honesty and candour of legal practitioners assume special significance, that the distinction between the rejection of a person's evidence and a positive finding that he or she deliberately lied be observed. The mere rejection of evidence can neither justify a consequence over and above that which properly attaches to the matter charged, nor deprive the person of the benefit of personal considerations which might otherwise be taken into account. … …A finding that a person deliberately lied when giving evidence is, in effect, a finding of perjury and, thus, it ought not to be made on “the single oath of another man, without any confirmatory evidence”.
The caution so emphatically expressed in the passages I have set out above is no mere historical observation. Nor is the justification underlying it confined to adjudications relating to any particular profession, trade or regulated undertaking. The intrinsic force of the ideas expressed in these passages resonates in the contemporary rules governing forensic conduct. One such example is found in the Legal Profession Uniform Conduct (Barristers) Rules 2015, which prohibit legal practitioners from making factual allegations, and specifically allegations “amounting to criminality, fraud or other serious misconduct” unless two conditions have been met - namely (i) actual belief that there is a proper basis for the allegation, and (ii) objectively reasonable grounds for the belief: see rules 64 & 65. The mandatory objectives of this Tribunal include the just and fair determination of its proceedings:- see the Administrative Appeals Tribunal Act 1975 (“AAT Act”) s 2A. There are related obligations imposed on parties to assist the Tribunal in endeavouring to achieve those objectives:- see AAT Act s 31(1AB). Those considerations dictate the conclusion that in proceedings in this Tribunal, as in any other similar adjudicative forum, parties should be alert to the forensic momentum that may attach itself to the motivations inherent in adversarial contests. In every instance a party’s allegations of fraud should be disciplined by the dual restraints of careful analysis and objectively reasonable grounds.
CONSIDERATIONS RELEVANT TO CHARACTERISING CONDUCT AS “MISLEADING”
In ordinary usage the concept of “misleading” is that of conveying a specific meaning that is erroneous. Conduct that is merely ambiguous or confusing, or that inherently invites or provokes further enquiry is not, at least not generally, properly to be characterised as misleading: Equity Access Pty Ltd v Westpac Banking Corporation (1990) ATPR 40-994 at 50,950. The conduct must be capable of inducing actual and relevant error: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198: Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45 at 87.
Furthermore, the characterisation of conduct as misleading also requires regard to context and circumstances. The whole of the relevant conduct must be evaluated in its context. And regard must be had to the actual intended addressee, audience, observer or recipient: If such a person has “a conscious awareness of the true facts or correct information” contentious conduct will rarely be capable of meaningful characterisation as misleading: Brown v Jam Factory Pty Ltd (1981) 53 FLR 340 at 348; Gipps v Gipps [1978] 1 NSWLR 454; Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304; (2009) 257 ALR 610 at [26]. If the postulated error is an extreme or fanciful proposition, or one not likely to be entertained by an ordinary or reasonable addressee or observer, it is not properly to be characterised as misleading or deceptive: Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45 at 87.
The characterisation of a statement as misleading or deceptive has to be determined by regard to the totality of the conduct, not just the literal text or content of the statement itself. In every communication, meaning depends on context: Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 623 - approved in Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 at 341-2. Moreover the characterisation of a particular statement may differ depending on both the circumstances of its making and the whether the conduct is addressed to a general audience or occurs in the context of a particular transaction or exchange between relevantly informed entities:- Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304; (2009) 257 ALR 610 at [25]-[26].
RELEVANT EVENTS
Various events provide a background chronology relevant to the assessment of Mr Abichandani’s fitness for approval as an SMSF auditor. The more important events and communications in that background begin with the three relevant audit reports, and are summarised in the chronology I set out in the following paragraphs.
March to May 2012:- Mr Abichandani signed the management letters to the SMSF trustees, and each of the audit reports, relating to the three relevant funds. (I will refer to these funds simply as “Gill”, “Iceman” and “Vanolini”.) Each of the reports and letters contained statements to the effect that Mr Abichandani (i) had audited the SMSF’s financial report, (ii) had done so in accordance with the relevant standards, (iii) had obtained audit evidence he believed to be sufficient to provide a basis for his audit opinion, (iv) considered that the financial reports fairly presented the material financial position of the SMSF as at 30 June 2011, and (v) considered that the SMSF had relevantly complied with the SIS Act and Regulations.
5 November 2012:-the ATO wrote to Mr Abichandani notifying him of an audit of his activities as the approved auditor of the three SMSFs. The ATO’s letter requested various specified documents. It also asked Mr Abichandani to complete a questionnaire.
28 November 2012:- Mr Abichandani provided various documents in response to the ATO request
15 August 2013:- An ATO officer emailed and telephoned Mr Abichandani following up the 5 November 2012 letter and requesting additional information and documents.
28 August 2013:- Mr Abichandani provided documents relating to the Gill fund
30 August 2013:- Mr Abichandani provided documents relating to the Iceman and Vanolini funds
26 September 2013:- The ATO wrote to Mr Abichandani informing him that it was considering referring him to ASIC - on the grounds that (i) he had failed to carry out his SMSF audit activities adequately and (ii) was not a fit and proper person to be an approved SMSF auditor. A position paper providing the basis for the ATO’s consideration accompanied the letter.
10 October 2013:- Mr Abichandani provided a seven page response to the ATO’s 26 September 2013 letter and position paper. This letter contained the statement “I refer to your letter… dated 26 September 2013 with regard to the audit carried out by me for 3 Self Managed Super Funds (“SMSF”).” (Numerous other parts of the letter contained Mr Abichandani’s first person statements referring to conduct involved in undertaking the audits and signing the audit documents.)
27 May 2014:- The ATO, acting under SIS Act s 128P, referred to ASIC details of its concerns about Mr Abichandani’s audit conduct in relation to the Gill, Iceman and Vanolini funds. A further position paper accompanied the ATO’s referral to ASIC.
16 September 2014:- ASIC wrote to Mr Abichandani and advised him that, as a result of the ATO referral, and in particular the matters set out in the ATO’s 26 September 2013 position paper, it was considering making a disqualification order under SIS Act s 130F(2). ASIC provided Mr Abichandani with copies of both the ATO position paper and his 10 October 2013 letter to the ATO. It invited him to provide any written response by 30 September 2014.
22 September 2014:- Mr Abichandani responded to ASIC’s 16 September 2014 letter. He provided copies of more recent communications from the ATO about his audit work. He also provided evidence that he had made a booking to undertake an SMSF auditor competency examination in November 2014.
21 August 2015:- ASIC wrote to Mr Abichandani (by email at about 3:00pm) informing him that it was considering imposing (under SIS Act s 128D) various conditions on his registration as an approved SMSF auditor. (One proposed required him to undertake two superannuation study courses with the following 12 months. Another proposed condition required him to submit three completed 2015 financial year SMSF audits for independent assessment. The specific fund audits, and the identity of the independent assessor, were to be notified to, and agreed by, ASIC by 30 September 2015.) The ASIC letter indicated that ASIC’s concerns about his audit performance included:-
(a) failure to identify SIS Act contraventions involving in house assets and non-arms length transactions
(b)the common dating of management letters and audit reports, in circumstances where the audit report was in fact issued after the management letter
(c)acceptance of trust declarations executed by only one of several trustees
(d)an absence of sufficient audit evidence to substantiate the arms length nature of transactions
(e)“some” audit documentation deficiencies.
21 August 2015:- Mr Abichandani responded to ASIC’s proposal at about 8:00pm the same day. His email began with the statement set out in paragraph 77(a) above. It went on to describe the proposed conditions as “ironic” in the light of (i) his authorship of the online auditing program (referred to in paragraph 12 above) and the content of a professional development lecture he was to deliver at an imminent conference. Mr Abichandani then continued on to (i) state that he did not want to object to “further conditions”, (ii) agree to the proposed training condition, (iii) provide a brochure for a training conference he proposed to attend, and (iv) seek ASIC’s agreement to the appointment of a particular individual as the independent audit reviewer.
24 August 2015:- ASIC emailed Mr Abichandani, drawing his attention to the statement in his 10 October 2013 letter (see paragraph 31 above) and to the apparent absence of any other relevant communication from him to the ATO. ASIC invited Mr Abichandani to submit for its consideration any documents relevant to his claim that the contentious audits had been carried out by Mr Vadher. In the same letter ASIC advised that it would accept his attendance at specific sessions in the conference program as satisfying the proposed superannuation study course conditions. ASIC also asked for details of any relationship Mr Abichandani had with the person he had nominated as the independent audit reviewer
24 August 2015:- Mr Abichandani promptly (at about 7:20pm) sent an email response to ASIC. He said that he “would prefer that we move forward and ignore who audited the fund as my name appeared on the income tax returns”.
1 September 2015:- ASIC wrote to Mr Abichandani notifying him of the conditions it had decided to impose on his registration as an SMSF auditor. (ASIC sent the letter by email at about 2:30 pm.) Those conditions were substantially to the same effect as those foreshadowed in the 21 August 2015 email. The one relevantly material difference was that Mr Abichandani did not have to nominate the completed SMSF fund audits by 30 September 2015. Instead he merely had to report quarterly the names of his completed SMSF audits, until those selected for independent assessment had been agreed.
1 September 2015:- Mr Abichandani again promptly responded to ASIC (by email at about 9:00pm the same day). He confirmed that he had booked to attend the conference ASIC had approved to satisfy the “course of study” condition. He also asked ASIC to nominate an auditor for the purpose of the independent review condition. He pointed out that (i) the person he had previously put forward was his partner, and (ii) since some 745 ASIC approved SMSF auditors used his online audit software, he considered that “finding a totally independent auditor could be a bit difficult for me”.
7 September 2015:- The following Monday night (at about 8:00pm) Mr Abichandani sent another email to ASIC. He acknowledged having received an ordinary mail copy of the ASIC condition letter that had been sent to him by email on 1 September 2015. His email formally requested that ASIC reconsider its second condition requiring independent assessment of three of his completed audits. He proffered 5 reasons for his request. The first stated reason was in the terms set out in paragraph 7(b) above. The other reasons he stated were (in order) (2) he would not be able to nominate three completed SMSF audits by 30 September 2015, because he had not been engaged to do any, (3) the 2014 SMSF audits he had completed had resulted in his lodging various contravention reports, a matter that ASIC could confirm for itself and which tended to demonstrate his competence, (4) ASIC could examine his online audit software, and make its own assessment of the SMSF competence and skill that it demonstrated he must possess, and (5) the condition was likely to prove fruitless because, if he eventually did conduct a 2015 SMSF audit it was inherently unlikely that an independent auditor would be able to discover a contravention he had missed.
8 September 2015:- The ASIC officer who had been the correspondent with Mr Abichandani in the various preceding email exchanges responded to him at about midday, in a further email. This response addressed Mr Abichandani’s outstanding queries about the hours he could claim for presenting at the proposed study conference. It also indicated that Mr Abichandani’s reconsideration request in relation to the second condition about independent audit review had “been forward to ASIC’s delegate’s area for their review”. Despite the fact that he had both received and read the emails of 21 August and 7 September 2015, and despite the significance subsequently given to them, the ASIC officer made no comment whatsoever about either of the statements set out in paragraph 7 above.
18 September 2015:- An unidentified ASIC employee telephoned Mr Abichandani forewarning him to expect the letter ASIC sent by email about an hour later. The handwritten summary refers to “inconsistencies in correspondence” and links that reference, with a looping arrow to a later written additional note “him saying he didn’t conduct audits”. There was nothing in the note’s context to indicate, at least not with any clarity, whether this was a reference to (i) statements in the previous correspondence, (ii) what was said in the telephone conversation itself, (iii) the three contentious audits themselves, or (iv) the reason why Mr Abichandani had requested removal of the “independent review” condition. Nothing in the letter ASIC sent an hour later referred to the telephone conversation, or assisted in clarifying the ambiguity in the content of the note. There was no other evidence about the conversation, or the note’s author.
18 September 2015:- Ten days later a different ASIC officer, whom the earlier correspondence does not reveal to have had any previous involvement in the communications with Mr Abichandani, wrote to him drawing attention to the fact that his claims not to have undertaken the contentious audits were inconsistent with both his signature on the reports themselves and with the statements he had made in his 10 October 2013 letter to the ATO. This ASIC officer obviously interpreted Mr Abichandani’s references to the tax returns in his two emails (see paragraph 7 above) as an assertion that “your name was merely used on the income tax return”. Apparently relying on that interpretation, the ASIC officer then went on to observe that the inconsistency, between such a claim and the audit documents themselves, suggested Mr Abichandani had “made untruthful or misleading statements to either the ATO and your clients, or to ASIC”. The letter went on to express ASIC’s concern that such statements called into question his fitness for registration, and stated that ASIC was considering whether to disqualify him from registration as an SMSF auditor.
18 September 2015:- Mr Abichandani sent an email response to ASIC at about 8:00pm the same day. His response included statements to the following effect;
(a)
he disputed the ATO’s conclusions about the correctness of his three contentious SMSF audits, had set out the basis of his views in the 11 October 2013 letter, and was frustrated by the ATO’s attitude, including lack of specific response to his letter,

(b)     he had not been actively involved in the day to day work of his accounting firm (because he had been caring for a psychiatrically ill daughter) and had only undertaken a few audits at the time he did the three contentious audits,
(c)     Mr Vadher had been doing most of the firm’s audits and in his frustration over the ATO’s criticisms, and his two August and September emails were only intended to suggest that Mr Vadher needed further SMSF education, but their contents were not expanded well enough to say clearly what he really meant,
(d)     he had understood his September email as relating only to the “CPD” condition, and his comments about the independent report condition were the result of frustration,
(e)     despite Mr Vadher’s work on the three audits, any statement that Mr Abichandani did not conduct them was wrong but had been made “in frustration and desperation and… late in the evening”, was not intended to convey that he had not issued the audit reports, and was not meant to be misleading - because the emails were addressed to the ASIC officer with whom he had been dealing and who, having read “the whole case history”, would have regarded the comments as meaningless and irrelevant,
(f)      he withdrew his request that ASIC reconsider the independent assessment condition imposed in its 1 September 2015 letter.
22 September 2015:- Mr Abichandani provided a further submission to ASIC. He summarised his position (in relation to his August and September statements to ASIC) as being “that I wrote two lines of irresponsible statements as I was frustrated with ATO for not answering to my letter and not correctly checking my audit files and my explanations provided to them”.
1 October 2015:- ASIC’s disqualification decision reasons accepted Mr Abichandani’s concession that it was inaccurate to say he did not conduct the audits. Having accepted that concession, ASIC’s reasons continued to attach significance to the reference to “tax returns” in his August and September 2015 emails. ASIC characterised Mr Abichandani as having implied “that his name merely appeared in the Relevant Fund’s tax returns, and that this was because he was a minor partner in the accounting firm that prepared the financial statements”. ASIC considered that this implied statement was also incorrect. ASIC went to contemplate that Mr Abichandani’s explanations for the inaccuracy of the statements about not conducting the audits (explanations primarily directed to his focus on the CPD issues) were accepted “for present purposes”, but could not explain or justify the inaccuracy of his “implied” statement relating to the use of his name on the tax returns. Later, without regard to the previously contemplated acceptance of his explanations, and expressing its findings to be “based on Mr Abichandani’s submissions”, ASIC declared its satisfaction that “he knew or ought to have known” that all of his statements (including the “implied” statement”) were knowingly untruthful and knowingly misleading.

7 October 2015:- Mr Abichandani wrote a fifteen page letter to ASIC requesting reconsideration of the disqualification decision. He sent the letter, and the many attachments to which it refers, by email on 8 October 2015 at 3:10 am. The date of the letter, its length, and the time the email was sent, suggest that Mr Abichandani had spent many hours, and more significantly, most of the night, in setting out his response. That suggestion is somewhat corroborated by the various parts of the contents of the letter. Sometimes they are largely repetitive, broadly consistent in their substance, but not always in nuances of expression. Sometimes they are needlessly discursive, and to that extent apparently irrelevant. Sometimes double negatives, and missing words, obscure the intended meaning. All of those considerations make it difficult to summarise the thrust of the letter. But, after endeavouring to allow for a degree of repetition and imprecision of expression, his letter can be described as containing statements to the following effect;
(a) The ATO had not given him a fair opportunity “to explain how I conducted my audits” and, in the course of conversations with the officers who conducted the 2012 / 2013 ATO audit he had mentioned that he had not done the audits but that he had supervised the other auditor and “my name was used”.
(b)The audits were conducted at a time of intense personal and domestic stress related to his teenage daughter’s illness, and care needs. Those facts, together with Mr Vadher’s handwriting on the various audit documents, tended to corroborate the fact that his own audit work “was limited to supervising Mr Vadher”.
(c)Mr Abichandani’s family circumstances had restricted his ability to attend the office, his personal involvement with the audit had been very limited (only about once a fortnight), and had involved only supervising and guiding Mr Vadher’s work.
(d)His repeated comments that “the audit was not done by me” could be “very confusing for ASIC” in the light of the “documentary proof” in the signed management letters and audit reports. But his comments were not intended to deny his own responsibility for the audits. They were merely intended to point out that any “CPD” requirement should also have been imposed on Mr Vadher.
(e)In particular, ASIC was quite wrong to have interpreted the references to tax returns in his August and September emails as involving a claim that his name “was merely used on the income tax return”. This was something that he had never said or implied.
(f)The signed management letters and audit reports were proof of the fact of his personal involvement and responsibility as the SMSF auditor.
(g)Conversely, the objective fact of Mr Vadher’s involvement was corroborated by the content of his invoices and by the practice manager
(h)His subjective state of mind was that he in fact did not audit the three funds but had helped Mr Vadher to complete them. His various statements (to the effect that he did not conduct the audit) should properly be understood against the background of the documents he had in fact signed, and his various comments to the ATO audit officers (to the effect that he had not been involved in “the whole audit process”).
(i)He was not sure what proportion of the actual audit work he should properly be characterised as having undertaken. But he accepted that because he signed the audit reports he should be held responsible for auditing the funds. It was never his intention to deceive anyone or take advantage of the situation or benefit or to make any untruthful statements.
(j)His two statements - that he did / did not audit the funds - were both correct because their context and purpose were different. The first statement was made for the purpose of objecting to the independent review requirement and the second was for the purpose of recognising his responsibility as the author of the audit reports.
(k)It was highly unlikely that a person of his experience and professional stature would intentionally make untruthful statements to ASIC in connection with the proposed conditions. That inherent unlikelihood was emphasised by the absence of any real prospect of deriving any benefit from the contentious statements.
19 October 2015:- The ATO advised ASIC it had no record to substantiate the proposition that, in the course of the 2012 / 2013 ATO audit Mr Abichandani had made any claims to the effect that he had not conducted the contentious audit work personally, but had instead been limited to the review and supervision of the work performed by the other auditor. Further, the ATO officer responsible for part of the 2012 / 2013 audit work reported that she had at no stage been aware of the involvement of another auditor, and had always believed that Mr Abichandani had personally conducted the audits for the three superannuation funds in question.
THE 21 AUGUST 2015 EMAIL STATEMENT
ASIC’s disqualification decision reasons proceeded on the bases that Mr Abichandani’s statements in this email were (i) intentionally and knowingly untrue, in so far as they stated he had not “done” the audits, (ii) intentionally misleading, in conveying that he had “no understanding of the audit work … and...findings”, (iii) made for the purpose for the purpose of deterring ASIC from taking steps in relation to his audit registration. In the course of its submissions in the present proceedings, ASIC characterised Mr Abichandani’s statements (in both the August and September emails) as conveying that he had “no meaningful part” in the contentious audits.
Right at the outset, ASIC’s contention about the intended meaning of the statement in the August 2015 email is inherently incredible. It involves the hypothesis that an experienced auditor would intentionally set out to convey such an understanding to ASIC when:
(a)     he had in fact signed each of the contentious audit reports,
(b)     he had previously written to the ATO acknowledging his signature and his personal responsibility for the reports,
(c)     he knew that ASIC had both the reports and also his October 2013 letter to the ATO,
(d)     he had never denied to ASIC his authorship of any of those documents.
What makes the hypothesis incredible is that it imputes to Mr Abichandani overwhelming stupidity. Long ago the English Master of the Rolls, Lord Cozens Hardy remarked that "If you find a defendant who is a knave you, may presume he is not a fool": Claudius Ash & Co Ltd v Invicta Manufacturing Co Ltd (1911) 28 RPC 597 at 603. It is a perceptive observation. It conveys the obviously forceful meaning that a person who sets out to intentionally deceive, and to derive a benefit from their deception, ought reasonably be credited with the foresight of having anticipated, and intended, the most likely reaction to their postulated dishonesty.
When the matter is approached from that perspective, ASIC’s contention postulates that Mr Abichandani sought to avoid the imposition of conditions on his registration by admitting to ASIC that, on no less than three occasions, he had signed audit reports with “no understanding” of the findings they contained or the underlying audit work. The objective reality is that conveying such a proposition to ASIC, and intending that it should be accepted as accurate, would unarguably have demonstrated Mr Abichandani’s fundamental disregard of his audit obligations and responsibilities. Such a fundamentally dishonest, and repeated, disregard of his audit obligations would have demonstrated his unarguable unfitness for registration. Yet this inevitable consequence was never addressed anywhere in ASIC’s decision reasons or its submissions - written or oral. This was so notwithstanding that it was alluded to in Mr Abichandani’s written submissions, and specifically raised by the Tribunal in the course of the hearing.
Moving on from the inherent incredibility of ASIC’s hypothesis of Mr Abichandani’s intentionally dishonest attempt to deceive and mislead, there is no doubt, and I find, that Mr Abichandani’s reference in this email to “my letter to ATO” was a reference to his letter of 10 October 2013. That was the letter in which he had responded to the ATO’s 26 September 2013 position paper. It was also the letter that had been provided to him by ASIC with its 16 September 2014 notice.
Against this background it is difficult to accept that Mr Abichandani’s email statement that he had “clearly mentioned in my letter to ATO that the audits were done by Mr Sanjay Vadher” was anything other than a careless and inconsequential (although somewhat surprising) mistake. The difficulty arises for 3 main reasons. The first reason is that there is demonstrably no such statement in the letter. The second is that, to Mr Abichandani’s certain knowledge, ASIC already had a copy of his 10 October 2013 letter - and could readily examine its contents for itself. It is not realistically conceivable, and I do not accept, that Mr Abichandani knowingly made an untrue claim about the contents of a letter that he knew was already in ASIC’s possession. His evidence, which I accept, was that he had not re-read the 10 October 2013 letter at any time after September 2014.
ASIC would, no doubt, seek to resist this finding by pointing to the claim Mr Abichandani made in the course of his oral evidence, that he had indeed written such a letter (and inferentially, a letter in addition to his October 2013 letter). But, irrespective of the specific date of any particular letter, the general point remains the same. Mr Abichandani was aware of the ATO’s reference to ASIC, and the likelihood that it had passed all relevant correspondence to ASIC. His very comment - that he was surprised ASIC had ignored his statement to the ATO - conveyed a belief that ASIC already had in its possession all relevant correspondence between him and the ATO about the contentious audits. Consequently, from his perspective there would have been no point in making any intentionally dishonest claims about the contents of a letter which he believed ASIC already had (or which, on ASIC’s hypothesis, he actually knew did not exist).
Next it is appropriate to point out that the 21 August 2015 email made no claim that he had not signed the audit reports. Furthermore, and contrary to ASIC’s original disqualification reasons, his email cannot be construed to imply that his name merely appeared on the tax returns of the relevant SMSFs. Indeed, as a matter of fact, all that the email statement actually conveyed was Mr Abichandani’s “surprise” that ASIC had ignored a statement he claimed to have made to the ATO.
The preceding considerations all provide powerful reasons to reject ASIC’s main contention, that Mr Abichandani’s 21 August 2015 email contained a knowingly false statement to ASIC about who had “done” the audits. Those considerations are underscored by the reality that, in this very email, Mr Abichandani explicitly accepted all the registration conditions that ASIC had proposed in the letter it had sent a few hours earlier. That acceptance was expressed in the third paragraph of his email. The paragraph began with the words “However, I do not want to object to further conditions which you are imposing to my registration as an approved auditor and I agree to take some training in SIS Act and SMSF Audit.” The thrust of his email response, far from being an attempt to deter ASIC from taking action in relation to his registration, was an express acceptance of the proposed conditions. Properly characterised, the substantive parts of his email were confined to requests for confirmation of ASIC’s willingness to accept the steps he proposed to take (in relation to (i) further training and (ii) independent evaluation) as satisfactory compliance with the proposed conditions.
Consequently, when regard is had to the full content of Mr Abichandani’s 21 August 2015 email there is no substance in the proposition that it was in any way intended to deflect ASIC from taking any action in relation to his SMSF auditor registration.
In the preceding analysis and findings I have rejected all three of ASIC’s primary contentions. As a matter of analysis of the actual language used, Mr Abichandani did not state to ASIC that he had not actually “done” the contentious audits. As a matter of reasonable and informed analysis, his statement to ASIC was not misleading in the manner contended for by ASIC - because, when regard is had to the totality of the information in ASIC’s possession, including the (never disputed) signed audit documents, it was fanciful for ASIC to construe Mr Abichandani’s statement as intended, or tending, to convey that he had no understanding of, or meaningful role in, the contentious audits. In that regard I add, whilst noting that it is not itself a necessarily determinative consideration, there is absolutely no evidence to suggest that ASIC, equipped as it was with the information I summarised in paragraph 51 above, ever actually understood Mr Abichandani’s email as conveying that he had no meaningful role in the audit. ASIC at all times proceeded on the basis that Mr Abichandani had signed the audit reports, and subjectively held the audit opinions they contained. (So much was implicit in paragraph 28 of ASIC’s reconsideration reasons.)
But there are additional reasons to reject ASIC’s contentions about Mr Abichandani’s dishonesty in relation to the contents of the 21 August 2015 email. Mr Abichandani’s 7 October 2015 letter set out, at elaborate length, his ready acknowledgement of the inaccuracy of a statement that he did not conduct the contentious audits, and the inconsistency of such a claim with the signed audit documents. He explained that his intended meaning was merely to point out the fact of Mr Vadher’s involvement in the audit work, and his subjective state of mind, relevant to the proposed “CPD” conditions, that his role in the actual audit work was supervisory, in the sense that he had taken over from Mr Vadher to resolve issues that Mr Vadher was unable or unwilling to resolve.
ASIC’s reconsideration reasons accepted the fact of Mr Vadher’s role - to the extent of accepting the probability that he had in fact done “the bulk” of the audit work. ASIC’s earlier reasons had gone to the point of accepting “for present purposes” Mr Abichandani’s explanation that his express statement that he had not “done” the audit work was directed, in his belief, to the “CPD” condition, and was not intended to disavow his personal involvement in, and responsibility for, the contentious audits. Against this background, and the necessary caution to which I referred in paragraphs 15 to 19 above, Mr Abichandani’s explanation, which I accept, provides a compelling reason to conclude that there is no proper basis for satisfaction that Mr Abichandani made the contentious statement in his 21 August email knowing that it was inaccurate, or with the intention of misleading ASIC.
THE 7 SEPTEMBER 2015 EMAIL STATEMENT
Mr Abichandani’s 7 September 2015 email (see paragraphs 7(b) and 41 above) was a specific response to the registration conditions ASIC had imposed in its 1 September 2015 letter. It contained a request that ASIC remove the second condition requiring independent evaluation of three of his 2015 audit reports. That request, because it related to a condition that had already been imposed, cannot accurately be characterised as an attempt “to deter ASIC from taking regulatory steps” (see paragraph 30 of ASIC’s 30 October 2015 reconsideration decision). But it was a formal reconsideration request. It expressly relied on SIS Act s 344. Its contents were, therefore, something about which Mr Abichandani could reasonably have been expected to take care, and to which ASIC would be expected to give careful consideration in the exercise of its statutory functions and discretion.
Strictly speaking however, Mr Abichandani’s expressed reliance on the reconsideration discretion in SIS Act s 344 was both misplaced and unnecessary. The reliance was misplaced because the discretion in SIS Act s 344 relates to the reconsideration of a substantive decision, rather than to the revocation or variation of a registration condition. The relevant statutory discretion, relating to Mr Abichandani’s request to remove the second condition, was conferred by SIS Act s 128D(1)(b).
Mr Abichandani’s application was unnecessary because the condition operated on the assumption that he had conducted, or would conduct, SMSF audits for the 2015 tax year. It required him to provide ASIC with a list of his SMSF audit appointments by 30 September 2015, and further lists quarterly thereafter until ASIC had agreed on the audits to be subjected to independent review. But ASIC’s review condition did not actually require Mr Abichandani to carry out any such audits. It did not even require him to have nominated any particular audit fund appointments - either by 30 September 2015 or at all.
On one view, Mr Abichandani’s misplaced, and unnecessary reliance on SIS Act s 344 is a matter of merely marginal significance. On another view it is relevant for two reasons. First, the misconceptions underlying his reconsideration request are consistent with his claims that, at the time of his various communications with ASIC he was both stressed and frustrated. They are consistent with those claims because they betray a state of mind, or at least a mode of expression, that was prone to inaccuracy. Secondly, the very fact of the request, when it was objectively unnecessary, tends to convey a subjective attitude of genuine willing engagement, and co-operation, with ASIC. That attitude is itself apparent from the first paragraph of Mr Abichandani’s 7 September 2015 email – which continued on with enquiries about the sufficiency of his proposed CPD activities in satisfying the first of the registration conditions ASIC had imposed.
The second paragraph of Mr Abichandani’s 7 September 2015 email began with his formal reconsideration request and set out five separate reasons for that request. The full wording of the first of his listed reasons is set out in paragraph 7(b) above. It was immediately followed by a second ground stating that he did not audit funds on a commercial basis, and would not be able to list any audit appointments by 30 September 2015. A third ground referred to his SMSF audit activities for the 2014 year, and the various contravention reports he had lodged. It suggested that those activities and reports demonstrated his relevant audit knowledge and expertise. A fourth ground referred to his authorship of the online SMSF audit program, and its widespread use. A final ground recorded his expectation that ASIC was unlikely to be able to find another auditor who would be able to find relevant fault with his audit work.
In the review proceedings ASIC relied on the sequence of the reasons stated in Mr Abichandani’s 7 September 2015 email, and contended that the first reason, with the statement that the three contentious audits were “not done by me” was the principal reason for the request. This reliance was simplistic and I reject the contention to which it led. As I have already pointed out, and as the opening paragraph of the 7 September 2015 email demonstrates, Mr Abichandani had never resisted the CPD conditions being imposed on his registration. I have also pointed out the unacceptable incongruity of proffering a claim that “the audits were not done by me” to a regulator who had in its possession signed and dated audit reports whose authenticity had never been in contest. In addition, it is clear that the reason for the second condition was to permit an independent assessment of Mr Abichandani’s audit work. It is also clear from the third and fourth reasons set out in the 7 September 2015 email, that Mr Abichandani took care to address that concern specifically - by referring to his 2014 tax year audits, and his significant activities demonstrating his knowledge and expertise as an SMSF auditor. Careful objective review of the text of Mr Abichandani’s 7 September 2015 email leads to the conclusion that the most direct, and therefore most logically persuasive, response to the second condition ASIC had imposed was Mr Abichandani’s knowledge, experience and SMSF audit activities in the 2014 tax year. Against that background there is no reason to accept, and good reason to reject, ASIC’s contention that the “primary reason” for Mr Abichandani’s 7 September 2015 request was his claim that the audits “were not done by me”.

I pointed out earlier in these reasons (at paragraph 47) that ASIC’s 1 October 2015 disqualification decision reasons had characterised the first of the reason paragraphs in Mr Abichandani’s 7 September 2015 email as making an implied statement “that his name merely appeared in the Relevant Fund’s tax returns”. That characterisation was not maintained in the 30 October 2015 decision reasons, nor in ASIC’s submissions in the present hearing. As a matter of literal and logical reading, there is no acceptable basis for construing a statement that “my name was used on the income tax return” as “implying” that neither Mr Abichandani’s name, nor his signature, appeared on any other document. As a matter of contextual interpretation, there is no acceptable basis for such an inference when (i) Mr Abichandani had in fact signed all of the relevant audit reports and management letters, (ii) he had never disputed either his execution of those documents or his personal responsibility for their contents, (iii) to his certain knowledge, ASIC had those documents in its possession, and (iv) ASIC had his 10 October 2013 letter to the ATO in its possession, and fully understood that it contained repeated statements in which Mr Abichandani accepted personal responsibility for the contents of the contentious audits.
There is an undeniable element of discord in the first of the reasons advanced in Mr Abichandani’s 7 September 2015 email. Reference back to the text of that statement (see paragraph 7(b) above) shows that it addressed three substantive topics:- (i) who had “done” the audits, (ii) the content of the tax returns, and (iii) Mr Abichandani’s partnership status when the respective SMSF’s financial statements had been prepared. None of these topics was expressly, or even logically, related. Indeed, the second and third matters were, as a matter of objective analysis, apparently irrelevant - given the background of Mr Abichandani’s never disputed authorship of the audit reports themselves. If they were matters that had any relevance at all, that relevance was perhaps as a background to the claim he made in the following paragraphs - that he no longer audited SMSFs on a commercial basis.
In the course of his oral evidence I raised with Mr Abichandani the apparent irrelevance of the second and third topics in the first reason paragraph in his 7 September 2015 email. My question, and his response, appear in the following extract from the hearing transcript:
Q:- My question is this; I don’t understand why you would say anything like that against the background where you had two years earlier accepted that you had an active part in the audit - whether it’s doing all the spade work or signing the return - you had accepted?
A:- Yes. I totally agree. This first paragraph is utterly nonsense because of at one point I agree that I have done the audit, I issued the audit report but I just want to let the tribunal know that two years have passed and I have gone through a traumatic period with my family, so writing this, I was totally frustrated and I wanted this matter to end because, you know, this was like going on and on and on and there was no way to finish and I said, “All right, now we have two things. We have the CPD to do, which I think by that time it was already bound by 7 September, already paid and booked and it was for 14 and 15 September. So this was - like I wasn’t auditing any funds and I said “Why are you auditing - why are you - why do you want to appoint another auditor to check my three audits?” So this is written totally - in total frustration and i just wanted this to end. And I apologised several times that I wrote it and I - the intention was not to come away from - or influence ASIC to remove the condition. I didn’t mind the condition because it could have never been - it could have never actually happened because nobody would give me an audit. I was not looking for audits. I had sold my tax practice the second half of (indistinct) so no-one - I was not looking - there was no way I could have given my audit working papers to someone else. And I also had written an audit program and I said - and I’d audited in 2014 and I proved it that I have lodged many contravention reports. So I’ve done a good job. I mean - and I gave evidence of the name of the fund and I offered those funds could be checked.
I regard Mr Abichandani’s response as both candid and accurate. His first reasons paragraph was nonsense. It did not convey any disavowal of the audit reports themselves. And in the absence of such a disavowal, the paragraph, with its conflation of matters, and unarticulated relevance, was of no real significance - except in one respect. That respect is that it was consistent with a background where Mr Abichandani was under significant personal pressure, frustrated by his impression that the ATO had not responded to his previous disagreement with its audit criticisms, and further frustrated by the length of time (almost three years) that had elapsed since the matter first arose.
Mr Abichandani acknowledged in his 7 October 2015 letter to ASIC that his statements that he had not done the audits could be “very confusing for ASIC”. His acknowledgment was justified. But, as he said in that same letter, neither statement was intended to deny his own personal responsibility for the audit. His subjective state of mind was that he was not solely responsible for the audit work, and that was what he had really intended to convey. (I have summarised the contents of Mr Abichandani’s 7 October 2015 letter in paragraph 48 above.) I accept his evidence and explanation. I specifically find that his statement “the audits … were not done by me” (in the 7 September 2015 email) was not knowingly false. I do so for three main reasons - (i) the inherent incredibility of the proposition that he understood his statement to convey that he had “no meaningful part” of the audit process and report, (ii) the contextual circumstances, which betray the confused expression and flawed reasoning in the content of the 7 September 2015 letter, and (iii) my own subjective impression of Mr Abichandani, based on the contents of his 7 October 2015 letter, and his oral evidence in the present proceedings.
SUBJECTIVE IMPRESSIONS OF MR ABICHANDANI
I was, on my initial reading of Mr Abichandani’s responses to ASIC in August and September 2015, somewhat apprehensive about the purpose of his claim that his name was used in the tax return. (That apprehension was one of the reasons I put the question set out in paragraph 71 above.) I was also apprehensive about the length, and somewhat discursive content, of Mr Abichandani’s 7 October 2015 letter. I was apprehensive that this lengthy letter, and particularly some references in it to the significance, or lack of significance, of the auditor’s name appearing in an SMSF entity’s tax return, was an intentionally created fog of irrelevance, designed to weary a reader from close analysis.
My apprehensions were allayed by Mr Abichandani’s oral evidence, both in content and manner. In relation to the content of his evidence, he was entirely persuasive in pointing out not only that he had never denied his authorship of the contentious audit reports, but also that he had accepted personal responsibility for the opinions they contained. In relation to the manner of his evidence, I had repeated occasions to cajole Mr Abichandani to pay attention to the particular question being asked, and to confine himself to addressing that question. He had a tendency to provide information that had not been asked about, to anticipate a criticism that had not been made, and to want to debate, in an adversarial way, the relevance or irrelevance of a particular topic or event. On none of these occasions, however, did Mr Abichandani convey to me any reluctance to endeavour to be accurate and truthful. On the contrary, the overwhelming impression Mr Abichandani conveyed was a deep frustration about, and lack of understanding as to how, his statements “the audits … were not done by me” could ever have been taken, in the context in which they were made, as intended to disavow his own personal audit responsibility.
Despite his long experience as an SMSF auditor, Mr Abichandani did not present as a person used to the sort of linguistic precision that underlay ASIC’s concerns about the significance of his 2015 email statements, and that tended to be expected of him in cross examination. Mr Abichandani often failed to perceive the precise nuances of questions, and did not confine himself to direct answers. From time to time he exhibited a tendency to anticipate both the content of questions, and their apprehended significance - rather than limit himself to direct responses. At times he admitted to confusion, or said he did not understand questions that were being asked. But when those questions were repeated or rephrased, his answers conveyed the impression that what had troubled him was the significance of the question, rather than the actual literal meaning of the words used.
In some contexts a witness who gave evidence in the manner that Mr Abichandani did in answering some questions, might be regarded as evasive, self-consciously protective of their own interests, and one whose evidence needed to be scrutinised carefully. However, that was not the impression that Mr Abichandani’s evidence gave me. Despite the fact that I had occasionally to draw his attention to the fact that he had not answered the precise question, or was proffering information about which he had not been asked, I regarded his evidence as generally careful, accurate and reliable. He had a clear idea of what he had intended to convey by his “I was not the auditor statement” and I regarded him as having consistently conveyed the substance of that idea. It was that he had not undertaken the primary audit work, and had a role essentially as a backstop, supervisor or senior auditor, in addressing the audit difficulties that Mr Vadher had been unable to resolve.
MISLEADING STATEMENT - 7 SEPTEMBER 2015 EMAIL
ASIC’s contention was that Mr Abichandani’s “the audits … were not done by me” statement in the 7 September 2015 email was misleading because it conveyed that he had “no meaningful part” in the audit reports or the findings they contained. That contention might have had some force if it was correct to have regard to its literal content, unrelated to its context, and unrelated to the matters of which ASIC was aware. One of those critically important matters was that Mr Abichandani had signed not only the audit reports themselves, but also the management letters and his own 11 October 2013 letter to the ATO. Furthermore, he had never disputed the genuineness of his signature on those documents. Nor had he sought to dispute the personal responsibility that attached to those reports. When that context and knowledge is taken into account, it is unrealistic - and to use the expressions condoned in Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45 at 87, at least unreasonable, and more likely fanciful - to regard his 7 September 2015 email as conveying the misleading impression contended for by ASIC. That meaning is inherently improbable - for the reasons I have earlier expressed - see paragraphs 51 to 53 above.
Even if I had come to the conclusion that Mr Abichandani’s 7 September 2015 email statement to ASIC was objectively misleading, I would not have regarded it, and do not regard it, as intentionally misleading. I have come to that conclusion for essentially the same reasons as those I expressed in paragraph 73 above.
OBSTRUCTIVE CONDUCT
Although ASIC’s decision reasons sought to express an alternative finding that Mr Abichandani “ought to have known” that his statement was untrue and misleading, the finding was expressed in a formulaic manner. It was not supported by any specific additional factual finding. On one view, a finding that Mr Abichandani “ought to have known” that any particular statement he had made was untrue, constitutes nothing more than a observation or finding that his statement was objectively wrong and involved an error that he ought not have made. But such an observation or finding begs enquiry about the reasons why he “ought” to have known that the statement was erroneous, and also “ought” to have appreciated its significance, at the time. Without specific findings about those reasons, the matter is left in the ambiguity of innocent, careless or unintended mistake. Mere mistake, evaluated against the constellation of human fallibility, rarely (if ever) justifies a conclusion that the person is undeserving of relevant characterisation as “fit and proper”. And for the reasons I have found, Mr Abichandani’s statement, most relevantly, the 7 September 2015 email statement, was merely mistaken.
As an alternative to its contention that Mr Abichandani’s statements were untrue and misleading, ASIC further contended at the hearing that they were “obstructive”. This submission was prompted by resort to the wording of one sub-paragraph in the nine illustrative considerations ASIC proffered in Regulatory Guide 243.30 as relevant considerations in the evaluation of a person as “fit and proper” for registration as an SMSF auditor. That sub-paragraph refers to whether a person has been “obstructive, misleading or untruthful” in dealing with an appropriate authority. ASIC’s submission, which was not developed with any precision, appeared to be that the imprecision, and apparent inaccuracy, in Mr Abichandani’s 7 September 2015 email was necessarily to be characterised as relevantly “obstructive” conduct.
In evaluating this submission, no less than in the evaluation of the contention that Mr Abichandani’s conduct was misleading, it is critically important to have regard to the context of the particular statement, ASIC’s own knowledge, and the totality of Mr Abichandani’s conduct. The reality is that ASIC had imposed its conditions. It had done so effectively with Mr Abichandani’s consent. He had sought a variation of those conditions, and proffered reasons for his request. These were matters that ASIC was obliged to consider, and to give such weight as it genuinely thought they merited.
ASIC apparently (but in my view wrongly) interpreted Mr Abichandani’s statement as implying that his name had merely appeared on the SMSF entities tax returns. It put that proposition to Mr Abichandani, in its 18 September 2015 email. Mr Abichandani responded to that concern - unequivocally disavowing the implication and adhering to his own personal responsibility for the relevant audit reports.
There is, in my view, no justification for regarding Mr Abichandani as having been relevantly obstructive in his 7 September 2015 communication with ASIC. On the contrary, his email, taken as a whole, was a rational and reasonable request. There is no justification for taking one of those proffered reasons - despite its inelegant expression and substantive irrelevance - and regarding it as a demonstration that Mr Abichandani had been obstructive. He had expressed himself poorly. His poor expression was something that ASIC justifiably queried. He responded immediately, and appropriately, to ASIC’s query. His conduct was not obstructive.
“BACKDATING” THE ICEMAN AUDIT REPORT
The material the ATO provided to ASIC, and other material provided by Mr Abichandani, included documents recording the following events relating to the Iceman SMSF and audit report for the 2011 tax year:-
(a)16 April 2012:- a “trustee representation letter” addressed to Mr Abichandani from the trustee of the Iceman Superannuation Fund
(b)30 April 2012:- an “audit management letter” signed by Mr Abichandani and addressed to the trustee of the Iceman Superannuation
(c)30 April 2012:- an audit report for the Iceman Superannuation Fund signed by Mr Abichandani
(d)30 April 2012:- an audit invoice, on Mr Abichandani’s letterhead is addressed to Iceman Superannuation Fund care of UC Services Pty Ltd (the accounting firm in which Mr Abichandani had an interest)
(e)2 May 2012:- an invoice from the Harisant Consulting Pty Ltd (Mr Vadher’s company) to UC Services Pty Ltd claiming “professional charges for audit of super funds for the year ended 30 June 2011” and listing Iceman Superannuation Fund as one of the charge items.
(f)15 May 2012:- the tax agent for the Iceman Superannuation Fund lodged the false tax return for the 2011 tax year. The tax return apparently indicated that the fund audit date (presumably referring to the date of the completed audit report) was 27 April 2012.
(g)28 November 2012:- Mr Abichandani provided various documents to the ATO, including a copy of the signed Iceman Superannuation Fund audit report referred to above.
All of this material comfortably supports the conclusion that Mr Abichandani completed the Iceman audit, and signed the audit report in about April 2012. Mr Abichandani had said so in his 10 October 2013 letter to the ATO. He repeated that evidence in the present proceedings. He additionally had explained to the ATO, in relation to the fact that the audit report and the management letter were both dated 30 April 2012, that he had held back the audit report until he had received appropriate responses to queries he had raised in the management letter. In that regard I note that the copy of the management letter produced to the ATO bears handwritten annotations apparently corroborating the fact that the client provided further responsive information after the date of the management letter.
Notwithstanding that evidence, ASIC contended Mr Abichandani had “backdated” the copy of the Iceman audit report he had sent to the ATO in November 2012. The basis of this submission was that part of the “audit report” documents had been printed on a version of the audit report form that came into existence after 30 April 2012, and applied to the 2012 (and not the 2011) tax year. Mr Abichandani partly conceded that fact, and said that the explanation for this appearance was that, in November 2012, he did not have a signed copy of the audit report and had not been able to get a copy from the Iceman Superannuation Fund’s accountant. His explanation for the latter inability was that the accountant had been overseas at the time.
The proposition that the original Iceman audit report was only relevantly signed in November 2012 is, on closer examination of the relevant documents, difficult to accept. ASIC’s contention turns on the content of the 2012 report form, and in particular, on the content of a cover page, and on the reference to particular sections of the SIS Act that appear only on an “Appendix” to the report. It is fair to say that those pages of the audit report document appear uncontestably to have been printed on the 2012 form. However, the “Part A” and “Part B” contents of the audit report appear on other pages of the “report” documents and are not readily identifiable as relating to the 2012 form. In particular, part B of the Report corresponds precisely with the content of the other two reports (Gill and Vanolini) whose contemporaneous execution in March and May 2012 was not disputed. Part B of all three reports lists the same relevant SIS Act provisions. None of them includes the particular sections that came into force for the 2012 tax year. The similarity in the content of the three audit reports encourages the conclusion that they were, at least in their original content, all signed in April 2012 - as Mr Abichandani contended.
ASIC criticised Mr Abichandani’s evidence about having been unable to locate a copy of the signed Iceman audit report in November 2012. In so far as he had not retained a signed copy, ASIC suggested he had failed to comply with his relevant retention obligations as an auditor. Mr Abichandani’s counsel substantially conceded the validity of that criticism. In so far as Mr Abichandani said he had not been able to obtain a copy of the signed audit report from the Iceman Fund’s accountant in November 2012, ASIC pointed to evidence suggesting that the accountant had not been overseas and that, consequently, Mr Abichandani’s explanation must be at least inaccurate, and probably untrue. Mr Abichandani responded that he had been told by one of his assistants that the accountant had been overseas, and he had accepted that explanation.

ASIC further criticised Mr Abichandani on the basis that he failed to tell the ATO, when he provided the audit documents in November 2012 that the Iceman audit report had been “backdated”.
I do not accept that the evidence justifies a finding that the Iceman audit was relevantly completed in November 2012, rather than shortly after 30 April 2012. Neither do I accept that the evidence justifies a finding that Mr Abichandani gave relevantly inaccurate or dishonest evidence about the fund accountant being overseas in November 2012. The precise detail of the reason why the audit report (or at least a part of it) was reprinted in November 2012 is an essentially irrelevant detail. There is, in my view neither reason to doubt the genuineness of Mr Abichandani’s explanation that his assistant told him the accountant was overseas, nor reason to attach any significance to the explanation.
The only matters of significance are that (i) the original Iceman audit report was, on my finding, probably completed, and the audit report signed, shortly after 30 April 2012, and (ii) Mr Abichandani did not retain a signed copy of the report. In relation to these two matters, Mr Abichandani’s conduct was deficient in not retaining a signed copy of the report. It was also deficient in that, having held back the signed audit report until outstanding queries had been satisfied, he should have re-dated the report, and given it the date of his actual concluded report opinion and satisfaction. However, those two criticisms, despite being justified, do not warrant a conclusion that Mr Abichandani is not “fit and proper” for registration as an approved SMSF auditor.
SUPPORTING EVIDENCE OF FITNESS
The evidence Mr Abichandani provided in support of his review application included letters from three people who knew him in his professional role as an SMSF auditor. One of these people had been a client of Mr Abichandani for many years. He declared his belief and satisfaction that Mr Abichandani was “very highly educated, knowledgeable with current superannuation law and a competent adviser.” In the client’s dealing with Mr Abichandani he had found him to be honest, hardworking and a person of both integrity and good character. Another person had been closely involved with Mr Abichandani in promoting and conducting SMSF training seminars. This person spoke of Mr Abichandani having conducted himself with “the utmost integrity and honesty”. The third person was the managing principal of a legal firm. He had been associated with Mr Abichandani for about two years. Their dealings had involved advice to mutual clients, and participation in education and training relating to superannuation matters. This lawyer described Mr Abichandani as having exhibited “the highest professional standards and ethics”. None of these commendations was challenged in the proceedings.
CONCLUSION
I pointed out earlier that an assessment of fitness and propriety required regard to a range of permissible considerations. Some of those considerations address the person’s technical competence. Some are concerned with the person’s reputation. Some are concerned with the person’s conduct. And where impugned conduct has been identified, an assessment must be made of its underlying relevance and significance. Even if the impugned conduct is potentially relevant and significant, an assessment must be made as to whether it is more properly characterised as an instance (or instances) of aberrant behaviour, or is indicative of an underlying lack of fitness and propriety. As Kitto J said, in a broadly analogous context, but one involving a much more serious episode of personal misconduct than the present, the relevant ends which a professional person must serve in the public interest may properly be described as “lofty indeed”. However, His Honour continued, “but it is with men and not paragons that he is required to pursue them. … it will be generally agreed that there are many kinds of conduct deserving of disapproval, and many kinds of convictions of breaches of the law, which do not spell unfitness … and to draw the dividing line is by no means always an easy task”: see Ziems v The Prothonotary (1957) 97 CLR 279 at 298.
In the present matter I am firmly of the view that Mr Abichandani made no intentionally false statement to ASIC. I am also of the firm view that neither of his August and September 2015 email statements impugned by ASIC was misleading. Certainly neither statement was intentionally misleading. I do not accept ASIC’s contention that Mr Abichandani made any knowingly false statement - either to the ATO, ASIC or in the course of the present proceedings - about having previously disclosed Mr Vadher’s involvement in the contentious audits. I do not accept the contention that Mr Abichandani made any knowing false statement, or any misleading statement in relation to the Iceman audit report. I do not accept that Mr Abichandani’s conduct in relation to the Iceman audit report (specifically the failure to retain a copy of the signed report and the re-printing of the report in November 2012, without specific disclosure of that fact to the ATO) has any relevant bearing on his status as a person who is fit and proper to be registered as an approved SMSF auditor.
I have had regard to Mr Abichandani’s uncontested qualifications and experience, his past significant period of registration, and the unchallenged and impressive supporting commendations he provided. I have also concluded that there is no substance in the criticisms ASIC made of his August and September 2015 email statements. In those circumstances, and referring specifically to the relevant disqualification criterion in SIS Act s 130F(2)(d) (on which the decision under review relied) I am satisfied that, Mr Abichandani is a fit and proper person to be an approved SMSF auditor for the purposes of the Act.

I certify that the preceding 96 (ninety -six) paragraphs are a true copy of the reasons for the decision herein of Mr P W Taylor SC, Senior Member
........................[sgd]................................................
Associate
Dated 8 November 2016

Date(s) of hearing 18 and 19 October 2016

Date final submissions received 26 October 2016

Counsel for the Applicant Mr R Chia

Solicitors for the Applicant Batallion Legal

Counsel for the Respondent Mr D Hume

Solicitors for the Respondent ASIC

Division	Taxation and Commercial Division
File Number(s)	2015/5994
Re	Manoj Abichandani
APPLICANT
And	Australian Securities and Investments Commission
RESPONDENT

Tribunal	Mr P W Taylor SC, Senior Member
Date	8 November 2016
Place	Sydney

Date(s) of hearing	18 and 19 October 2016
Date final submissions received	26 October 2016
Counsel for the Applicant	Mr R Chia
Solicitors for the Applicant	Batallion Legal
Counsel for the Respondent	Mr D Hume
Solicitors for the Respondent	ASIC

[2008] AATA 580

4 July 2008