Wang and Australian Securities and Investments Commission

[2022] AATA 457

Wang and Australian Securities and Investments Commission [2022] AATA 457 (18 February 2022)

Division:TAXATION AND COMMERCIAL DIVISION

File Number:          2022/1035

Re:Harry Wang

APPLICANT

AndAustralian Securities and Investments Commission

RESPONDENT

DECISION

Tribunal:R Cameron, Senior Member

Date of decision:                   18 February 2022

Date of written reasons:        17 March 2022

Place:Melbourne

Upon the applicant undertaking by his Counsel, that he will not resume directorships of any other company other than Advanced Circular Polymers Pty Ltd and ACP HR Pty Ltd;

The Tribunal has made orders that until the determination by the Tribunal of the application for review or further order:

1.The operation and implementation of the respondent’s decision of 21 January 2022 to disqualify the applicant for a period of five years from managing corporations without the leave of Australian Securities and Investments Commission (“the decision”) be stayed pursuant to section 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (“the Act”);

2.The respondent be restrained from issuing any press release or other notification with respect to the decision and from including any reference to the decision in any publications, alerts or any Public Register pursuant to section 41(2) of the Act;

3.The respondent must forthwith remove all reference to the decision from any of its publications, alerts and the Public Register pursuant to section 41(2) of the Act; and

4.Pursuant to section 35(4) of the Act, Exhibits MTL-1 and MTL-2 to the affidavit of Michael Thomas Lescai sworn on 13 February 2022 be kept confidential on the Tribunal’s file, and access to them not be permitted without order of the Tribunal.

....[sgd]....................................................................

Senior Member

Catchwords

STAY APPLICATION –- prospects of success – consequence of the refusal of the stay – public interest – consequences for the respondent – whether the application would be rendered nugatory – other relevant matters – stay order granted - CONFIDENTIALITY APPLICATION – prejudice to the applicant – high threshold – public transparency – confidentiality order refused

Legislation

Administrative Appeals Tribunal Act 1975 (Cth)
Australian Securities and Investments Commission Act 2001 (Cth)

Corporations Act 2001 (Cth)

Cases

Australian Securities Investments Commission v Administrative Appeals Tribunal (2009) 181 FCR 130
Bolton and Australian Securities Investments Commission [2015] AATA 977
Poidevin v Australian Securities Investments Commission [2018] AATA 124
Scott v Australian Securities Investments Commission [2009] AATA 798

XQZT v Australian Securities Investments Commission [2009] AATA 669

REASONS FOR DECISION

R Cameron, Senior Member

17 March 2022

INTRODUCTION

1. The applicant seeks review of a decision made by a delegate of the respondent on 21 January 2022 disqualifying him from managing corporations under section 206F of the Corporations Act 2001 (“the Corporations Act”) without its leave for a period of five years.

2. The applicant seeks the following interlocutory orders:

   (a)an order pursuant to section 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) staying the operation of the decision until the determination of the Tribunal on the application for review comes into operation;

   (b)an order pursuant to section 41(2) of the Act granting a stay of the implementation of the decision, including restraining the respondent from issuing any press release or other notification with respect to the decision until the determination of the review;

   (c)an order pursuant to section 41(2) of the Act that the respondent remove from the published register of disqualified directors any reference to the applicant;

   (d)orders pursuant to section 35(2) and (3) of the Act that:

   (i)the applicant be described by a pseudonym for the purpose of protecting his identity;

   (ii)the hearing shall take place in private and that only the parties and their representatives and witnesses, the Tribunal and staff may be present; and

   (iii)the publication or disclosure of evidence or the contents of documents lodged with or received in evidence by the Tribunal be restricted to the parties and their representatives and witnesses, the Tribunal and staff and Auscript staff.

3. Additionally, a witness Mr Lescai seeks that certain exhibits be kept confidential on the Tribunal’s file, under section 35(4) of the Act.

   THE ACT

4. Section 41(2) of the Act provides:

   “The Tribunal may, on request being made by a party to a proceeding before the Tribunal…. if the Tribunal is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make such order or orders staying or otherwise affecting the operation or implementation of the decision to which the relevant proceeding relates or a part of that decision as the Tribunal considers appropriate for the purposes of securing the effectiveness of the hearing and determination of the application for review.”

5. The Full Federal Court in Australian Securities Investments Commission v Administrative Appeals Tribunal[1] (“ASIC v AAT”) explained that the power in section 41(2) of the Act is conditional on the making of a request and the holding of an opinion by the Tribunal. The required opinion is that it is desirable to make that order. The Tribunal may only form this opinion after taking into account “the interests of any persons who may be affected by the review”. Accordingly, the Tribunal must identify for itself and consider the relevant interests.

   [1] (2009) 181 FCR 130.

6. Those interests are to be identified by reference to the statutory scheme within which the decision under review was made. In this case, a banning order was made under section 206F of the Corporations Act. As the Full Court observed, given the nature of a banning order, the persons who may be affected by a review of its making include not only the recipient and his or her dependents, associates and employees but also others including the public at large.[2]

   [2] ASIC v AAT at [51].

7. To form an opinion under section 41(2) of the Act that it would be desirable and in the interests of any persons who may be affected by the review to make an order staying or otherwise affecting the operation or implementation of the respondent’s decisions, the elements of the statutory regime and the balance between the competing interests they represent must be treated as a fundamental element in the weighing of the competing considerations.

8. In this regard, Mr Rosewarne appearing for the respondent highlighted the provisions of section 206F itself together with the provisions of section 1(2) of the Australian Securities and Investments Commission Act 2001 (Cth) which specify that in performing its functions the respondent must endeavour to:

   (a) maintain, facilitate and improve the performance of the financial system and the entities within that system in the interests of commercial certainty, reducing business costs, and the efficiency and development of the economy;

   (b) promote the confident and informed participation of investors and consumers in the financial system;

   …

   (f) ensure that information is available as soon as practicable for access by the public; and

   (g) take whatever action it can take, and is necessary, in order to enforce and give effect to the laws of the Commonwealth that confer functions and powers on it.

9. The Tribunal is mindful of the purpose behind the statutory regime that enables company directors to be banned under section 206F. There is a strong public interest element in ensuring that company directors carry out their tasks in accordance with the duties and obligations cast upon them. Public confidence that corporations will be managed competently and diligently is essential.

   THE STAY APPLICATION

10. In the exercise of the discretion whether to grant a stay application the following factors have been identified in several authorities as relevant to the Tribunal’s consideration:[3]

    (a)the prospects of success of the substantive application for review;

    (b)the consequences for the applicant of the refusal of the stay;

    (c)the public interest;

    (d)the consequences for the respondent in carrying out its functions depending upon whether a stay is granted or not;

    (e)whether the application for review would be rendered nugatory if a stay were not granted; and

    (f)other matters that are relevant.

    [3] See Scott v ASIC [2009] AATA 798 at [4] per Justice Downes.

11. These factors are not to be taken as a checklist each of which must be satisfied in order for a stay to be granted.

12. They will now each be considered.

    (A) Prospects of success

13. The Tribunal should not, when assessing the prospects of success, undertake a mini trial or a preliminary hearing of the application based upon the evidence.

14. It is relevant for the Tribunal to consider whether there are facts, circumstances or points of law that may be argued at a substantive hearing which may lead to a different result.[4]

    [4] See Deputy President Redfern in Poidevin v Australian Securities Investments Commission [2018] AATA 124 at [39] – [40].

15. The respondent points to the reasons for the delegate’s decision which are helpfully summarised at paragraph 15 of its outline of submissions. It contends that proper regard was given to the information before her that was of relevance to the merits of the decision as to whether a banning order was justified. It contends that the material filed on behalf of the applicant is insufficient to establish any prospects of success. At best, it is contended, there may be some prospect of having the length of the banning order reduced.

16. On the other hand, the applicant contends that the evidence he has put before the Tribunal for the purposes of this application shows that it has strong prospects of success.

17. It is worthwhile briefly looking at a summary of this evidence. It should be observed that the contents of exhibit HW-1 to Mr Wang’s first affidavit consisted of 344 pages of material much of which was before the delegate.

    The recycling businesses

18. Mr Wang was a director of four companies involved in the business of recycling waste plastic[5] from November 2016 until they were wound up on 4 February 2019. By the time of their liquidation, he had invested a total of $5.35 million in those companies.

    [5] Hereinafter collectively referred to as “the recycling companies”.

19. For eight months after becoming a director of the recycling companies Mr Wang did not work in them. There were two other directors who did, Mr Interlandi (who also happened to be his accountant) and Mr Cala. Mr Cala was the managing director with responsibility for the day-to-day operations of the business with full control of its financial affairs.

20. From July 2017 Mr Wang worked full-time in the recycling companies. He discovered that Mr Interlandi had paid himself $500,000 in consulting fees which were not authorised.

21. Subsequently Mr Wang discovered that Mr Cala had been misappropriating company funds. Details of these activities were before the Tribunal in the form of a police statement that had been made by Mr Wang.

22. Another matter contended for by the applicant is with respect to the company Recycling Solutions Pty Ltd. Whilst there was the sum of $5,778,537 owing to unsecured creditors, the majority of that amount, namely $5,152,487.16, was owed to related parties. Most of this was owed to Mr Wang’s family trust through the holding company. It was not a case where the company failed owing millions of dollars to third-party creditors.

23. The liquidator wrote to Mr Wang on 19 July 2019 informing him that he did not intend to conduct any litigation against him and that he did not believe the respondent would do so.[6]

    [6] The letter from the liquidator also formed part of exhibit "HW-1" to Mr Wang's first affidavit.

24. The liquidator prepared funded section 533(2) reports concerning Mr Wang on 23 October 2019. The liquidator made the following findings:

    (a)Mr Wang acted with the necessary due care and diligence with respect to the exercise of his director’s duties as required, although Mr Cala had breached this duty to the company;

    (b)Mr Wang exercised his powers and discharged his duties in good faith in the best interests of the company and for the proper purpose as required although Mr Cala breached this duty to the company;

    (c)Mr Wang had not utilised his position to derive benefit, although Mr Cala had done so;

    (d)Mr Wang and Mr Cala may have contravened section 588G by failing to prevent insolvent trading, however based upon other findings of the liquidator there was no claim to be made. The liquidator found the company was insolvent as early as 30 June 2018, and also found that no further debts in respect of external creditors were incurred from 30 June 2018; and

    (e)The liquidator was of the opinion that ASIC should not consider Mr Wang as a candidate for director banning, but rather consider Mr Cala as the sole candidate for director banning.

25. In short, the applicant contends that the delegate ignored the liquidator’s findings and recommendations and found to the contrary. This was notwithstanding that the delegate accepted that Mr Wang was not involved in Mr Cala’s misconduct. Such misconduct was in a setting where it was hidden from him. This, it is said, imposed an unrealistic standard on directors requiring them to know at all times of any breach of duty being committed by fellow directors however concealed. Mr Cala has apparently not been disqualified from being a company director.

26. The applicant contends that the delegate, when considering the recycling companies, made findings relying upon some evidence and ignored other evidence that may have been exculpatory in effect. He contends there was a selective reference to the contents of the police statement referred to earlier. In particular, no reference to the parts of such statement identifying how the applicant attended to the affairs of the company and otherwise discharged his duties to it. Such evidence, it is contended, was ignored. It is said that there was an emphasis on evidence unfavourable to Mr Wang.

27. The Tribunal cannot reach a conclusive view on this topic in an interlocutory hearing of this nature. However, if the liquidator who is an officer of the court reaches a conclusion that the applicant was not a candidate for director banning and had not otherwise breached his director’s duties, it is open to the Tribunal to accept that evidence. There must be some prospects of success. Similarly, if the Tribunal at a final hearing were to find that the activities of Mr Cala and Mr Interlandi had occurred as outlined in the material before it for the purposes of this application, there must be some prospects of success.

    Jade Capital

28. Mr Wang was a non-executive director of Jade Capital from September 2017 until 19 February 2019. The company was wound up on 26 April 2019. Jade Capital was a company involved in what are known as Managed Discretionary Accounts. It held a AFS licence. Several directors were the responsible managers for the company from time to time.

29. The applicant in his second affidavit explained how he carried out his duties as a non-executive director of Jade Capital.

30. One of the critical events that appears to have been a factor leading to the winding up of Jade Capital was a successful complaint made by a client to the Australian Financial Complaints Authority which on 14 February 2019 ordered Jade Capital to pay $272,000 plus interest and costs. Shortly after this order the company ceased trading. Mr Wang resigned as a director shortly thereafter on 19 February 2019 as noted.

31. The liquidator stated he was unable to properly form an opinion as to the causes of the liquidation.

32. The applicant contends that the liquidator’s findings against him are not strong.

33. The liquidator expressed the opinion that Mr Wang may have failed in his obligation as a director to maintain proper books and records. Mr Wang counters this by pointing out that the company’s accounts were audited and signed off each year by an external auditor.

34. The liquidator expressed an opinion that the company may have been trading whilst insolvent. The debts incurred while the company was insolvent amount to $43,360. Mr Wang was a director when $36,546 of such sum had been incurred. It is contended that this is comparatively small in the scheme of things.

35. The liquidator contends that the company failed to lodge appropriate returns. Mr Wang contends that this needs to be looked at with a degree of realism as only one tax return, one monthly activity statement and one quarterly activity statement were not lodged. He contends this does not justify disqualification of him as a director.

36. There is reference by the liquidator to “possible” phoenixing activity by Mr Wang. the Applicant contends there is just no evidence to support such an assertion.

37. The liquidator makes no recommendation as to whether Mr Wang should be considered for a banning order.

38. The applicant contends that he did undertake the tasks required of him as a non-executive director of Jade Capital in a proper and diligent manner.

39. Considering the material that is before the Tribunal concerning Jade Capital, it cannot be said there are no prospects of success. Even if the allegations are made out, they appear to the Tribunal to be at the lower end of the scale and it may well be questionable whether a banning order would be justified if the conduct is confined to just this corporation.

    Conclusions on prospects of success

40. For the reasons articulated, the Tribunal concludes that with respect to both the recycling companies and Jade Capital there must be some prospects of success. This weighs in favour of granting a stay order.

    (B) Prejudice to the applicant and third parties

41. The respondent contends that the affidavit material that has been relied upon by Mr Wang concerning the question of prejudice is wholly conclusory and not really evidence at all. It is true to say that the affidavit material concerning prejudice is scant and one might have expected more underlying facts or perhaps more accurately an evidentiary foundation or platform to have been established in the material placed before the Tribunal. Most of the evidence concerning prejudice is contained in paragraph 39 of Mr Wang’s first affidavit sworn on 10 February 2022. By way of example, he deposes to the fact that a change of management control may operate as an event of default giving rise to various rights of termination with the financiers of the company known as Advanced Circular Polymers (“ACP”). The respondent makes the point quite properly that one would have expected the relevant facility agreements and security documents that contain a default clause along those lines to have been in evidence in whole or in part.

42. There are several grounds relied upon to establish prejudice by the applicant.

43. They are what he says is the irreparable and material damage that would be caused to the business of his company ACP and in turn, the livelihood of its 80 employees.

44. The reasons for this are:

    (a)Mr Wang has had the primary responsibility for the management of ACP since its inception. Mr Lescai deposes that the decision and its publication will have immediate operational problems for ACP, as Mr Wang is closely involved in the company’s strategy and growth, research and development and its day-to-day operations;

    (b)Mr Wang’s removal from management will likely have a significant impact on ACP’s business with a loss of confidence by a myriad of stakeholders including government, employees, financiers, suppliers and the wider community. He identifies key stakeholders of ACP as including the University of Melbourne and government instrumentalities. Mr Wang has also observed that opportunities and requirements of ACP for the respective contributions from those stakeholders will be permanently lost to it. On the other hand, the respondent contends that those stakeholders ought to know of the banning order as it would be relevant to their decision to enter into any relations with ACP;

    (c)Damage to ACP’s business risks the livelihood of its 80 employees;

    (d)There will be the loss of hands-on management expertise that Mr Wang has provided to date;

    (e)As noted earlier a change of management control may operate as an event of default giving rise to various rights of termination for financiers;

    (f)Mr Wang has primary responsibility for managing the environment risk on the site because due to the nature of the business and the volume of waste ACP deals with, Mr Wang’s expertise requires him to be hands-on in managing these risks;

    (g)Mr Wang has been leading R & D activities in ACP. It is halfway through three projects funded by Cooperative Research Centres Projects Grants. Mr Lescai also deposed that Mr Wang is the person dealing with ACP’s R&D grants. Recently he has been working with the University of Melbourne. His inability to be involved in the management of the business will threaten the viability of the company’s R&D projects. It is asserted that it could derail current discussions regarding further grants; and

    (h)Also, there are material competitive threats to ACP from major corporations within the waste collection and recycling industry. These rival traders he contends will endeavour to undermine ACP’S future progression.

1. Finally, the fortunes of Mr Wang and ACP are intertwined. It is contended that the disqualification order will have a significant reputational and financial impact on him personally. His family trust has invested some $11 million in ACP and loaned $1 million more. It is contended that the damaging impact of publication of the decision upon ACP and its revenue and the significant risk to security of the investment will have a great impact on Mr Wang and his family financially.

2. The parties mentioned the relevant interests that must be taken into account by the Tribunal for the purposes of considering whether to make an order under section 41(2) of the Act.

3. The Tribunal accepts there is a risk of prejudice of the type and nature contended for by the applicant if the stay is not granted. It is apparent that Mr Wang is the driving force behind ACP and if a stay is not granted it will have an immediate and significant impact upon that company’s fortunes as contended in several respects. This factor must weigh heavily in favour of granting a stay.

   (C) Public interest considerations

4. The Tribunal accepts that the need to protect consumers and customers is a matter of particular importance when assessing public interest impacts. It also accepts, as was contended for by the respondent, that in addition to protecting the public a banning order is also part of the object of general deterrence. The Tribunal did not understand the applicant to disagree with these propositions.

5. The respondent contends that any detriment identified by the applicant is clearly outweighed by public interest considerations of protecting the public and general deterrence.

6. What the applicant contends is that there is little public interest impact in granting the stay sought. He points to the evidence before the Tribunal which is accepted, that ACP is operating successfully being managed carefully and diligently with an additional layer of independent oversight and guidance from both an advisory board and the fact that it has engaged Deloittes as its external accountants and advisors. He therefore contends that the public interest is better served by permitting Mr Wang to continue to manage ACP. This is particularly so given the development of the plastic recycling business and employment it provides to 80 employees.

7. The Tribunal accepts the applicant’s contention concerning this factor that there is minimal public interest impact in granting a stay sought.

8. Additionally, the Tribunal considers that any public interest impact the grant of a stay might have can be ameliorated by bringing the matter on for a speedy hearing as quickly as possible which objective the respondent agreed to cooperate on.

   (D) The consequences for the respondent in carrying out its functions

9. ASIC contends that granting a stay in the current case would be inconsistent with the purposes of the underlying regulatory regime, details of which have been addressed earlier in these reasons. That regime requires ASIC to exercise its powers and take steps as are necessary for protection of the public and to enforce and give effect to the laws of the Commonwealth.

10. The Tribunal acknowledges the force in this contention. It weighs against granting a stay.

    (E) Application for review nugatory if stay not granted

11. Limited argument was submitted to the Tribunal concerning this factor.

12. The applicant contended that he is likely to be successful in the substantive application. If the banning order is permitted to stand until such time the damage will be material and irreparable as has been discussed earlier in these reasons. The damage will be to not only Mr Wang but ACP and its stakeholders. It is submitted therefore it is desirable and important to secure the effectiveness of the hearing and the Tribunal’s determination which is one of the objects of section 41 (2) of the AAT Act.

13. This contention is of course dependent upon some level of speculation as to what the potential for damage could be and to whom such damage might be caused.

14. However, the Tribunal is prepared to accept that this is a real risk on the material that is before it.

    CONCLUSION ON WHETHER TO GRANT A STAY ORDER

15. Taking into account the factors identified above, the Tribunal has formed an opinion that it would be desirable and in the interests of persons who may be affected by the review to make an order staying the operation or implementation of ASIC’s decision.

16. The question then becomes what form of stay order should be granted. The applicant’s counsel in closing submission stated that she had instructions to undertake that the applicant would not resume directorships of companies other than ACP or ACP HR Pty Ltd (“ACP HR”) if a stay was otherwise granted.

17. The Tribunal considers it appropriate to require this undertaking as ACP or ACP HR and their stakeholders are most affected by the decision.[7] Therefore, he would be limited or confined to carrying out director’s duties with respect to both of those companies.

    [7] The other companies of which the applicant is a director were described as largely asset holding companies and not trading entities.

18. The Tribunal considers it appropriate to make an order in the form proposed in paragraph 3 of the applicant’s proposed orders (under section 41(2) not section 35(3) which is in the form of a mandatory injunction). The Tribunal considers that it has the power to make such an order as it does, as is contended for by the applicant, relate to activity which is part of the operation or implementation of the disqualification or banning order and should therefore be characterised as “otherwise affecting” that operation or implementation.[8]

    [8] The authorities referred to in footnote 10 of the applicant's submissions are referred to. Particularly the case of Opus Capital which required ASIC to remove all reference to the decision under review from the Public Register and any of its publications and alerts. In XQZT v Australian Securities Investments Commission [2009] AATA 669 the tribunal stayed the gazettal of the decision.

19. It acknowledges the contention of Mr Roseworne for the respondent that in effect the “cat is out of the bag”. It also contends that given the fact that the register has been updated to include details of the applicant’s disqualification and proceedings have been commenced in this Tribunal in his name there is no utility in the making of such an order.

20. However, the Tribunal is satisfied that the potential for prejudice and damage identified above is sufficient to warrant the making of such an order.

    THE CONFIDENTIALITY APPLICATION UNDER SECTION 35

21. Both parties accept that the prima facie position under section 35(1) or the “norm” is that proceedings should be conducted in public. It is a difficult hurdle for an applicant to jump. It is instructive to reproduce what section 35(1) actually says:

    “Subject to this section, the hearing of a proceeding before the Tribunal must be in public.”

22. There is the power under sub-sections 35(2), (3) & (4) to depart from the norm and make privacy and confidentiality orders including that the applicant be identified by use of a pseudonym. There must be compelling reasons. It is a power that is to be exercised sparingly.

23. The approach to be adopted when applying section 35(2), (3) and (4) was helpfully summarised by the Full Court of the Federal Court of Australia in ASIC v AAT.[9]

    “[74]… Although s 35 (1) is subject to the balance of the section, it establishes a norm. The norm is that the proceedings before the AAT shall be in public. This norm is reinforced by the requirements of s 35 (3) which expressly confirmed the principle that it is desirable that hearings be held in public. It follows that when deciding whether it is satisfied that it is desirable to exercise its powers under s 35 (2), the AAT is required to form a state of satisfaction which recognises the existence of the norm and the values it is intended to protect. This, no doubt, is why Brennan J in Re Pochi and Minister for Immigration, Ethnic Affairs (1979) 36 FLR 482 at 510 described the power in s 35 (2) to depart from this norm as one to be exercised “sparingly”. It also explains the approach in Australian Securities and Investments Commission v PTLZ (2008) 48 AAR 559; [2008] FCAFC164 at [6], [41], and [42] (an appeal to the Full Court of the Federal Court from the decision of the AAT in Re PTLZ and Australian Securities and Investments Commission (2008) 100 ALD 648; [2008] AATA 106) emphasising that the words of s 35 (3) require this principle of the desirability of hearings to be in public to be “the basis” of the AAT’s consideration of adopting a different approach (in contrast, for example, to “a basis” for that consideration).

    [75] Suppression orders are rarely made in courts, even though publicity undoubtedly disadvantages the parties. Criminal proceedings are a good example. In the AAT itself facts which parties would not wish to be published and which may disadvantage them are frequently published. Social Security applications are a good example. The reason these matters are not kept secret is the overriding importance of justice being administered openly and in public. It is not readily apparent why persons in business should be treated differently even when, for example, employees may be disadvantaged.

    [76] When measured against the existence of the norm of a public hearing and the scheme established by the Corporations Act with respect to banning orders, it is apparent that the AAT would need some cogent reason by reference to the particular case to depart from the ordinary requirement of a public hearing. It is difficult to accept that harm (even serious harm) to the recipient’s reputation resulting from public awareness of the banning order will be a sufficiently cogent reason to justify the grant of a stay in most cases. This is because the risk of harm of this type is inherent in the nature of a banning order.”

    [9] (2009) 181 FCR 130

24. The applicant relies upon the prejudice he says will be caused to him and others which has been articulated earlier in these reasons, which he says in effect amount to compelling reasons within the meaning of the authorities.

25. The respondent contends, and the Tribunal agrees, that the prejudice identified by the applicant is the same or substantially the same type as that referred to by the Full Federal Court in the passages from ASIC V AAT. It does not accept that the harm identified by the applicant in the material filed on his behalf constitutes a sufficiently cogent reason to justify an order being made under sections 35(2), (3) & (4) of the AAT Act.

26. The Tribunal also accepts the contention of the respondent that it would be inconsistent with the statutory scheme described for entities such as the University of Melbourne and government instrumentalities to make decisions in relation to funding of ACP without full knowledge of the fact that the delegate’s decision has been made and that Mr Wang has sought review of such decision in this Tribunal.

27. It agrees that public transparency would not be served by any confidentiality orders under section 35.

28. In Bolton and Australian Securities Investments Commission[10] (“Bolton’s case”) Deputy President Forgie expressed the following view which is apposite to this application:

    “The evidence given by Mr Moffat regarding AFML and the potential for its fund rating to be downgraded and so its ability to attract and retain funds to be adversely affected if the disqualification order is known is the very reason the disqualification should remain in the public arena. Mr Bolton is a director of a publicly listed company: Keybridge. AFML is wholly owned by Keybridge and a funds manager. A disqualification order is a serious step for ASIC to take. It is important that the review of ASIC’s decision to make that disqualification order be open to public scrutiny. The public needs to be able to satisfy itself that the proper steps are followed and the proper considerations taken into account by the Tribunal in performing its role in the regulatory framework established by the corporations law. It also needs to know that ASIC is exercising its powers and carrying out its duties under that law in a manner consistent with the objects of the Corporations Act. The proceedings in the Tribunal provide an opportunity for scrutiny of that sort.”[11]

    [10] [2015] AATA 977.

    [11] At [92].

29. It is acknowledged that Bolton’s case involved allegations of dishonesty by the director concerned which is not the case here.

30. The Tribunal considers that insufficient material has been adduced to satisfy it that the norm should be departed from. It must be repeated that the evidence before the Tribunal is relatively limited and in some instances conclusory. The Tribunal concludes that such evidence does not reach the level of compelling reasons, or sufficiently cogent as required. A much more substantial evidentiary platform or foundation would be required before the Tribunal would be persuaded that it is appropriate to make orders under section 35 as sought. For instance, there is absolutely no evidence as to the precise details of the dealings that ACP is having with the University of Melbourne and “government instrumentalities” as deposed to by Mr Lescai. Indeed, the government instrumentalities are not even identified. One would have expected them to have done so. The same observations previously made about possible default underlying loan agreements and security documentation are referred to and repeated.

31. It will not make orders under section 35 as sought save for the orders concerning the exhibits to Mr Lescai’s affidavit which were not opposed by the respondent.

    DECISION

32. Upon the applicant undertaking by his Counsel, that he will not resume directorships of any other company other than Advanced Circular Polymers Pty Ltd and ACP HR Pty Ltd.

33. The Tribunal has made orders that until the determination by the Tribunal of the application for review or further order:

    (a)The operation and implementation of the respondent’s decision of 21 January 2022 to disqualify the applicant for a period of five years from managing corporations without the leave of Australian Securities and Investments Commission be stayed pursuant to section 41(2) of the Act;

    (b)The respondent be restrained from issuing any press release or other notification with respect to the decision and from including any reference to the decision in any publications, alerts or any Public Register pursuant to section 41(2) of the Act;

    (c)The respondent must forthwith remove all reference to the decision from any of its publications, alerts and the Public Register pursuant to section 41(2) of the Act; and

    (d)Pursuant to section 35(4) of the Act Exhibits MTL-1 and MTL-2 to the affidavit of Michael Thomas Lescai sworn on 13 February 2022 be kept confidential on the Tribunal’s file, and access to them not be permitted without order of the Tribunal.

78.     I certify that the preceding 77 (seventy-seven) paragraphs are a true copy of the written reasons for the decision herein of R Cameron, Senior Member

....[sgd]......................................

Associate

Dated: 17 March 2022

79.     Dates of hearing:

15 February 2022

Counsel for the Applicant:

Solicitors for the Applicant:

Ms Rome-Sievers

Piper Alderman

Counsel for the Respondent:

Solicitors for the Respondent:

Mr Rosewarne

Australian Securities and Investment Commission