Wharton and Australian Securities and Investments Commission
[2002] AATA 443
•7 June 2002
CATCHWORDS – JURISDICTION – Corporations Law – banning order s. 829 Corporations Law – whether Tribunal limited by the grounds upon which the reviewable decision was made – whether Tribunal can consider other grounds on which the reviewable decision could have been based – Tribunal not limited to original grounds specified in reviewable decision.
Corporations Law ss. 9, 88, 806, 807, 809, 824, 825, 826, 827, 828, 829, 830, 831, 832, 833, 836, 837, 1317B, 1317C and 1317D
Corporations Act 2001 ss. 1371, 1400 and 1401
Administrative Appeals Tribunal Act 1975 s. 25
Administrative Decisions (Judicial Review) Act 1977 s. 3
Australian Securities and Investment Commission v ABC Fund Managers (2001) 39 ACSR 443
Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577
Australian Broadcasting Tribunal v Bond (1990) 94 ALR 11
Lamb v Moss (1983) 49 ALR 533
DECISION AND REASONS FOR DECISION [2002] AATA 443
ADMINISTRATIVE APPEALS TRIBUNAL )
) V1998/150
GENERAL ADMINISTRATIVE DIVISION )
ReSTEPHEN LYNNE WHARTON
Applicant
AndAUSTRALIAN SECURITIES & INVESTMENTS COMMISSION
Respondent
DECISION
Tribunal: Miss S A Forgie (Deputy President)
Date: 7 June, 2002
Place: Melbourne
Decision:The Tribunal:
(1)decides that, in the review of the respondent's decision dated 15 September, 1997, the respondent is not limited to the ground specified in s. 829(a) of the Corporations Law; and
(2)adjourns further consideration to a telephone directions hearing to be held on Monday, 24 June, 2002 at 9.30 am.
S A FORGIE
Deputy President
REASONS FOR DECISION
On 19 February, 1998, the applicant, Mr Stephen Lynne Wharton, applied for review of a decision of the respondent, a delegate of the Australian Securities and Investment Commission ("the Commission") dated 15 September, 1997. An order extending the time within which he might make that application was subsequently made on 21 April, 1998. The Commission's decision was to prohibit permanently Mr Wharton from doing an act as a representative of a securities dealer or an investment adviser.
The progress of this case through the Tribunal has taken many twists and turns. There now arises a question regarding the scope of the issues under review. The parties have both made written submissions and have agreed that the issue be determined on the papers.
THE ISSUE
The issue in this case is whether, in reviewing the Commission's decision to make a banning order, the Tribunal may have regard to any of the grounds upon which the decision could have been based or whether it is limited to the ground upon which that decision was made.
LEGISLATIVE BACKGROUND
Legislative changes
Since the Commission's decision was made and Mr Wharton lodged his application for review, the Corporations Law ("the Law") has been repealed and the Corporations Act 2001 ("the Act") enacted. Section 1400 of the Act applies in relation to a right or liability, whether civil or criminal, that was acquired, accrued or incurred under a provision of the Law and that was in existence immediately before the existence of the Act. This is called the "pre-commencement right or liability". It does not extend to a right or liability made under a court order. On the commencement of the Act, the person acquires, accrues or incurs a right or liability, known as a "substituted right or liability", equivalent to the pre-commencement right or liability. He or she does so under the corresponding provision of the new Corporations legislation which includes the Act (s. 1371(1)). Where the pre-commencement right or liability was acquired, accrued or incurred under a provision of the Law that has been repealed but the right or liability was in existence immediately before the commencement of the Act, the Act is taken to include the provision of among others, the Law (s. 1401). The referrals in these reasons will, therefore, be to the provisions of the Law as in force at the time the decision was made.
Regulation of participants in the securities industry
Chapter 7 of the Law deals with securities. It is divided into various parts, each of which deals with a separate aspect of the securities industry. Part 7.3 deals with the participants in the securities industry. So, for example, it requires that those who carry on a securities business (i.e. a dealer (s. 9)) or an investment advice business (i.e. an investment adviser (s. 9)) must be licensed as such. It sets out the obligations that licensing brings and the rights of those who deal with unlicensed dealers and investment advisers (Divisions 1 and 2). A dealers licence and an investment advisers licence may both be referred to as a "securities licence" and a "securities licensee" as a person who holds one or other or both of the licences (s. 9)
Division 3 regulates representatives of dealers and investment advisers. A body corporate may not act as a representative (s. 809). A person may act as a representative of a dealer but only if the dealer holds a dealer's licence and the representative holds a proper authority from the dealer (s. 806). He or she may act as a representative of an investment adviser but only if the investment adviser is either a dealer holding a dealer's licence or holds an investment adviser's licence and the representative holds a proper authority from the investment adviser (s. 807). A "proper authority" from the dealer or the investment adviser (i.e. the securities licensee) is a reference to a copy of the dealer or investment adviser's licence on which is endorsed a statement certifying the copy to be a true copy, stating that the representative is employed by, or acts for or by arrangement with, the securities licensee and signed by the securities licensee (s. 88). Division 3 of the Law sets out the obligations of the licensed dealer or investment adviser in relation to those holding his or her proper authority and those of the representative.
Division 4 regulates the liability of licensed dealers and investment advisers for the conduct of their representatives while Division 5 provides for the exclusion of persons from the securities industry. Sections 824, 825 and 826 of Division 5 provide for those circumstances in which the Commission may revoke a licence held by a dealer or an investment adviser. Subject to s. 837, the Commission may suspend a licence (s. 827(1)). In certain circumstances, the Commission may also issue a banning order under s. 828 if the dealer or investment adviser is a natural person.
Section 829 provides for those circumstances in which the Commission may make a banning order against a natural person who is not a licensed dealer or investment adviser but is a representative of a licensed dealer or of an investment adviser. Subject to s. 837 to which I will return, the Commission may make a banning order if:
"(a) he or she becomes an insolvent under administration;
(b)he or she is convicted of serious fraud;
(c)he or she becomes incapable, through mental or physical incapacity, of managing his or her affairs;
(d)he or she contravenes a securities law;
(e)the Commission has reason to believe that he or she is not of good fame and character;
(f)the Commission has reason to believe that he or she has not performed efficiently, honestly and fairly the duties of:
(i)a representative of a dealer; or
(ii)a representative of an investment adviser; or
(g)the Commission has reason to believe that he or she will not perform efficiently, honestly and fairly the duties of:
(i)a representative of a dealer; or
(ii)a representative of an investment adviser." (s. 829)
Where the Commission decides to issue a banning order, it must do so by a written order. It may:
"… prohibit the person:
(a)in any case – permanently; or
(b)except where the Commission is empowered by virtue of paragraph 828(c) or 829(e) to make the order – for a specified period;
from doing an act as:
(c)a representative of a dealer;
(d)a representative of an investment adviser; or
(e)a representative of a dealer or of an investment adviser;
whichever the order specifies." (s. 830(1))
Whether the banning order is made permanently or for a specified period, it may include a provision that:
"… permits the person, subject to such conditions (if any) as are specified, to do, or to do in specified circumstances, specified acts that the order would otherwise prohibit the person from doing." (s. 831(1))
Subject to s. 837, the Commission may, at any time, vary a banning order against a person by, among other matters, adding a provision permitting a person to undertake specified acts as set out in s. 831(1) (s. 831(1)).
The only other way in which the Commission may vary or revoke a banning order is in accordance with ss. 832 and 833 (s. 830(2)). It may not grant a dealer's licence or an investment adviser's licence to a person if a banning order prohibits that person from doing an act as a representative of a dealer or of an investment adviser (s. 836).
Section 837 requires the Commission to comply with certain procedures before it may make orders or take steps specified in s. 837(1). Of relevance in this case is the requirement that:
"The Commission shall not:
…(e)make, otherwise than by virtue of paragraph … 829(a), (b) or (c), an order under section 830 against a person;
…
unless the Commission complies with subsection (2) of this section." (s. 837(1)(e))
Section 837(2) provides that:
"The Commission shall give the applicant, licensee or person, as the case may be, an opportunity:
(a)to appear at a hearing before the Commission that takes place in private; and
(b)to make submissions and give evidence to the Commission in relation to the matter."
BACKGROUND
On 24 November, 1988, ABC Fund Managers Limited ("ABC") obtained a securities dealers licence. Mr Wharton held a proper authority from ABC dated 1 September, 1993 within the meaning of s. 88 of the Law. Less than a year later, on 16 November, 1994, he became bankrupt when a sequestration order was made by the Federal Court.
Almost three years later, on 15 September, 1997, a delegate of the Commission made the decision under review which reads:
"… pursuant to s. 829(a) and 830 of the Corporations Law, the Australian Securities Commission HEREBY PROHIBITS YOU from doing an act as a representative of a securities dealer or an investment adviser permanently." (T documents, page 5)
On 11 October, 2001, Warren J delivered her judgement in Australian Securities and Investment Commission v ABC Fund Managers (2001) 39 ACSR 443. The headnote to the report of that judgement summarises the facts:
"The defendants were involved in round robin lending and investment transactions.
The nature of the transactions engaged in by the defendants was essentially as follows: first, a large principal sum of money was borrowed by individual investors from a company, with the first year's interest; second, an income tax deductions was created; third, the Tax Office owed tax deductions to the PAYE tax payer; the refund of moneys was directed back to the company. In short, the Tax Office was funding a non-income producing activity. The total amount of funds lent and invested, then repaid between 1995 and 1998 was in the order of $100m.
The plaintiff, ASIC learnt of the transactions and completed an investigation, during which it obtained certain admissions from officers of the companies. There was evidence that indicted not only that investors had been misled, but that there was a failure by the defendants to prepare accounts, final accounts, formal accounts or balance sheets for the companies and trusts.
Following the completion of its investigation, it commenced proceedings against the defendants, seeking winding-up orders and injunctive relief to restrain further breaches of the Corporations Act 2001 (Cth) and associated declaratory relief." (page 443)
Warren J granted the relief sought and the essence of her reasons was also summarised in the headnote:
"(i) For the court to wind up a corporation on the just and equitable ground there needs to be demonstrated: first, a lack of confidence in the management of the affairs of the corporation; second, a risk to the public interest that warrants protection. The court will be reluctant to wind up a solvent company, although in this case given serious ongoing breaches of the Corporations Act with respect to record and account keeping, a winding-up order was justified.
…(ii)It was appropriate to wind up the companies within the scheme, their trustees and managers, given the misleading nature of the information given to investors, continuing breaches of the Corporations Act, the admissions that interests were issued in respect to subscriptions and securities without a prospectus having been lodged and without the form being attached to the prospectus or an approved deed.
…" (pages 443-444)
Her Honour found the evidence of Mr Wharton, whom she found to be one of ABC's directors until 3 November, 1995, to be "very vague about the corporate structure and commensurate trustee structure" (page 461). She also concluded that he was "an unreliable and evasive witness" even though she specifically did not draw any adverse inference from his refusal to answer certain questions on the basis of his claim of privilege against self-incrimination (page 461). Warren J found that the transactions entered by ABC and others were shams entered into in order to defraud the Australian Taxation Office (page 473) and that:
"The round robin transactions give rise to serious concerns about the propriety of the director and secretary of the trustees and managers of the schemes, Wharton and Gillies. For this reason alone I consider it is inappropriate that they not be left to deal with investors when winding up the schemes." (page 477)
On behalf of Mr Wharton it was submitted that he did not file any affidavit as the Supreme Court had given him leave to do, that his evidence at the trial had dealt only with business activities undertaken by ABC and others, that no adverse findings should be made against him because of his refusal to answer questions on the basis of his claim of privilege against self-incrimination and that none of the 22 trusts was a public trust and so did not call for the involvement of a licensed securities dealer or its proper authority holders. There is no need to make any findings of fact on this matter.
On 25 October, 2001, the Commission revoked ABC's dealers licence pursuant to s. 825(b) i.e. on the basis that it had become an externally-administered body corporate.
CONSIDERATION
On behalf of Mr Wharton, it is submitted that the Commission's decision is limited by its terms. That is to say, in specifically stating that it made the decision pursuant to ss. 829(a) and 830, the Tribunal's power to review the decision was limited to a consideration of the correct or preferable decision in light of that ground. It may not have regard to any other grounds specified in s. 829 (and particularly grounds specified in ss. 829(e), (f) and (g)) and this is underlined, it was submitted, by the requirement that the Commission comply with s. 837 before making its decision. Compliance with s. 837 meant that the Commission had to give Mr Wharton an opportunity to appear at a private hearing before the Commission and to make submissions and give evidence in relation to the matter. On behalf of the Commission, it was submitted that, once the decision had been made, it was not limited to the ground initially relied upon.
A consideration of whether or not the Tribunal has jurisdiction to review a particular decision begins with a consideration of its jurisdictions to review a particular decisions, then moves to a consideration of the nature of the Tribunal's review before concluding with a consideration of the ambit of the particular decision of which review is sought.
Section 25(1) of the Administrative Appeals Tribunal Act 1975 ("AAT Act") provides that:
"An enactment may provide that applications may be made to the Tribunal:
(a)for review of decisions made in the exercise of powers conferred by that enactment."
Section 25(4) provides the necessary corollary to this sub-section when it provides that the "... Tribunal has power to review any decision in respect of which application is made to it under any enactment." The general powers of the Tribunal are found in other provisions of the AAT Act. The remaining ten sub-sections of s. 25 go on to refine the general proposition made in s. 25(1) and to provide that an enactment may modify the operation of any particular provision of the AAT Act. The effect of s. 25 is that regard must be had to the terms of the enactment to decide whether or not the Tribunal has been given jurisdiction.
In the context of this case, regard must be had to s. 1317B(1) of the Law, which provides, in part, that:
"(1) Subject to this Part, applications may be made to the Tribunal for review of a decision made under this Law by:
(a)…
(b)the Commission; or
(c)…"
Those decisions excluded from the scope of s. 1317B(1) are:
"(a) a decision in respect of which any provision in the nature of an appeal or review is expressly provided by this Law; or
(b)a decision that is declared by this Law to be conclusive or final or is embodied in a document declared by this Law to be conclusive evidence of an act, matter or thing; or
(c)(Omitted by No 110 of 1991, Sch 2 (effective 27 June 1991).
(d)a decision made by the Commission in the performance of a function, or in the exercise of a power, under section 601CC or 601CL or Chapter 5A; or
(e)a decision by the Commission to refuse to exercise a power under section 601CC or 601CL or Chapter 5A; or
(f)a decision to apply under section 596A or 596B for the Court to summon a person for examination about a corporation's examinable affairs; or
(g)a decision to apply under section 597A for the Court to require a person to file an affidavit about a corporation's examinable affairs; or
(h)a decision to make a determination under subsection 1317D(3)." (s. 1317C)
Section 1317D sets out the procedures that must be followed when a decision-maker makes a decision, which is reviewable by the Tribunal under the Law. Except in those situations to which s. 1317D(3) applies:
"… the decision maker must take such steps as are reasonable in the circumstances to give to each person whose interests are affected by the decision notice, in writing or otherwise:
(a)of the making of the decision; and
(b)of the person's right to have the decision reviewed by the Tribunal." (s. 1317D(2))
Those situations in which notice need not be given occur if the decision-maker determines that giving notice to the person is not warranted having regard to the cost of doing so and the way in which the person's interests are affected (s. 1317D(3)). A failure to comply with the s. 1317D does not affect the validity of the decision (s. 1317D(4)).
As the decision made on 15 September, 1997 in relation to Mr Wharton was made by the Commission under s. 829 of the Law and as it is not a decision excluded from review by s. 1317C, it is a decision that may be reviewed by the Tribunal. I have already set out the terms of s. 829 above (see paragraph 8).
What is the nature of the Tribunal's review of the decision? This was addressed by Smithers J in Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 (Bowen CJ, Smithers and Deane JJ):
" It might be thought that it would be open to the Administrative Appeals Tribunal not to decide for itself whether a decision made by an administrator was the right decision which ought to have been made in the circumstances but rather to satisfy itself that the decision of the administrator was one which an administrator acting reasonably might have made. But to do this would be to review the reasons for the decision rather than the decision itself. It is the actual decision which by virtue of s 25(1) and (4) of the Administrative Appeals Tribunal Act the Tribunal is authorized and required to review. The duty of the Tribunal is to satisfy itself whether a decision in respect of which an application for review is duly instituted is a decision which in its view, was objectively, the right one to be made. Merely to examine whether the administrator acted reasonably in relation to the facts, either as accepted by him or as found by the Tribunal may not reveal this. In this connection the observations of Sheppard J in Horne v Locke [1978] 2 NSWLR 88 at 98–100 are in point. It is to permit implementation of the function of the Tribunal, as so understood, that there has been conferred upon the Tribunal extensive powers of investigation. Those powers are conferred so that the Tribunal may equip itself to make an appropriate recommendation or affirm the decision: see s 43 of the Administrative Appeals Tribunal Act …" (page 599)
In the same case, Bowen CJ and Deane J said:
"The question for the determination of the Tribunal is not whether the decision which the decision-maker made was the correct or preferable one on the material before him. The question for determination of the Tribunal is whether that decision was the correct or preferable one on the material before the Tribunal." (page 589)
That takes me back to the decision of which review is sought in this case. It is said to have been made "pursuant to sections 829(a) and 830 of the Corporations Law". An analysis of the Law reveals that the decision is indeed a two step process. The Commission may only make a banning order if it is satisfied of one or more of the grounds specified in s. 829. If it decides that it is so satisfied, that is not a decision to make a banning order. It is empowered to make such an order but not obliged to do so. The Commission must then go on to consider whether it will make a banning order and, if so, the particular nature of the banning order that it will make within the parameters specified in s. 830. It is not until it has taken all three steps that it may make the banning order.
Clearly, the Commission has made a decision at each of the three steps preceding the making of the banning order. A fourth decision is made to actually make the banning order. Is each of the four decisions reviewable? In considering this question, I have had regard to Australian Broadcasting Tribunal v Bond (1990) 94 ALR 11 (Mason CJ, Brennan, Deane, Toohey and Gaudron JJ). Their Honours considered the definition of "decision" in s. 3(1) of the Administrative Decisions (Judicial Review) Act 1977 ("ADJR Act"). That definition defines the word, in part and in so far as they are relevant in this case, in terms of "… a decision of an administrative character made … under an enactment …". A reference to the making of a decision includes such actions as making, suspending, revoking or refusing to make an order, award, or determination or doing or refusing to do any act or thing (ADJR Act, ss. 3(2)(a) and (g)).
Mason CJ observed, that it was:
"... clear that a 'decision to which this Act applies' must be a decision of an administrative character, that it may be made in the exercise of a discretion, and that it must be made under an enactment. But these characteristics provide little guidance as to the meaning of the word 'decision' upon which the definition in s3(1) is based." (page 22)
His Honour, with whom Brennan J and Deane J agreed, considered the competing policy considerations to be taken into account in determining the compass of the word "decision". These were:
"On the one hand, the purposes of the ADJR Act are to allow persons aggrieved by the administrative decision-making processes of government a convenient and effective means of redress and to enhance those processes. On the other hand, in so far as the ambit of the concept of 'decision' is extended, there is a greater risk that the efficient administration of government will be impaired. Although Bowen CJ and Lockhart J appeared to emphasise the first of these considerations in Australian National University v Burns (1982) 64 FLR 166 at 172; 43 ALR 25 at 30, there comes a point when the second must prevail, as their Honours implicitly acknowledged. To interpret 'decision' in a way that would involve a departure from the quality of finality would lead to a fragmentation of the processes of administrative decision-making and set at risk the efficiency of the administrative process." (page 23)
Mason CJ went on to say:
"The policy arguments do not, in my opinion, call for an answer different from that dictated by the textual and contextual considerations. That answer is that a reviewable 'decision' is one for which provision is made by or under a statute. That will generally, but not always, entail a decision which is final or operative and determinative, at least in a practical sense, of the issue of fact falling for consideration. A conclusion reached as a step along the way in a course of reasoning leading to an ultimate decision would not ordinarily amount to a reviewable decision, unless the statute provided for the making of a finding or ruling on that point so that the decision, though an intermediate decision, might accurately be described as a decision under an enactment.
Another essential quality of a reviewable decision is that it be a substantive determination. With the exception of s3(2)(g), the instances of decision mentioned in s3(2) are all substantive in character. Moreover, the provisions in sub-ss(1),(2),(3) and (5) of s3 point to a substantive determination. In this context the reference in s3(2)(g) to 'doing or refusing to do any other act or thing' (emphasis added) should be read as referring to the exercise or refusal to exercise a substantive power. I do not perceive in s16(1)(b) or in para (e) of Sch 1 or para (1) of Sch 2 to the ADJR Act any contrary implication. These exclusions from the ADJR Act or from s13 appear to have been introduced for more abundant caution and it would be unwise to take too much from them.
If 'decision' were to embrace procedural determinations, then there would be little scope for review of 'conduct', a concept which appears to be essentially procedural in character. To take an example, the refusal by a decision-maker of an application for an adjournment in the course of an administrative hearing would not constitute a reviewable decision, being a procedural matter not resolving a substantive issue and lacking the quality of finality. Then it is the 'conduct' of the hearing in refusing an adjournment that is the subject of review. To treat the refusal of the adjournment in this way is more consistent with the concept of 'conduct' than with the notion of 'decision under an enactment'." (pages 23-24)
Mason CJ made it clear that a reviewable decision need not be one which ultimately determined all of the issues when he referred to Lamb v Moss (1983) 49 ALR 533. He said:
"Lest it should be thought otherwise, I should say that, to the extent in Lamb v Moss that the magistrate decided that a prima facie case had been established and that he would proceed with the committal proceedings, a reviewable decision had been made. That decision was one for which s41(2) of the Justices Act 1902 (NSW) specifically provided. The decision resolved an important substantive issue to be determined before the ultimate decision could be made under s41(6) of that Act whether to commit the defendant for trial or discharge him from custody." (page 24)
In considering the word "conduct", which is defined in sub-section 3(5) of the ADJR Act to include
"... a reference to the doing of any act or thing preparatory to the making of the decision, including the taking of evidence or the holding of an inquiry or investigation."
Mason CJ said that its meaning becomes clear once it is accepted that a "decision" is
"... one that generally is substantive, final and operative ... In its setting in s6 the word 'conduct' points to action taken, rather than a decision made, for the purpose of making a reviewable decision. In other words, the concept of conduct looks to the way in which the proceedings have been conducted, the conduct of the proceedings, rather than decisions made along the way with a view to the making of a final determination. Thus, conduct is essentially procedural and not substantive in character. Accordingly, s3(5) refers to two examples of conduct which are clearly of that class, namely, 'the taking of evidence or the holding of an inquiry or investigation'. It would be strange indeed if 'conduct' were to extend generally to unreviewable decisions which are in themselves no more than steps in the deliberative or reasoning process.
Accordingly, there is a clear distinction between a 'decision' and 'conduct' engaged in for the purpose of making a decision. A challenge to conduct is an attack upon the proceedings engaged in before the making of the decision. It is not a challenge to decisions made as part of the decision-making process except in the sense that if the decisions are procedural in character they will precede the conduct which is under challenge. In relation to conduct, the complaint is that the process of decision-making was flawed; in relation to a decision, the complaint is that the actual decision was erroneous. To give an example, the continuation of proceedings in such a way as to involve a denial of natural justice would amount to 'conduct'. That is not to deny that the final determination of the proceedings would constitute a decision reviewable for denial of natural justice." (page 27).
The terms within which a "decision" is defined in the ADJR Act is consistent with the manner in which it is defined in s. 3(3) and in which it is used in s. 25(1) of the AAT Act. The principles set out by the High Court are equally applicable to the interpretation of the word in s. 25(1). Adopting those principles, the Tribunal may, unless a contrary intention is indicated in the particular legislation conferring jurisdiction, only review the decision that is the substantive, final and operative decision. In the case of this case, the decision that meets that description is the making of the banning order. The decision taken on each of the other three steps is essential in that the banning order cannot be properly made unless each has been made. For all that, though, they are what were described as "decisions made along the way with a view to the making of a final determination" (Mason CJ, page 27).
When viewed in that way, the decision that the Commission was satisfied that Mr Wharton had become insolvent under an administration as set out in s. 829(a) becomes simply one of the three decisions made with a view to making of the banning order. It was a decision that gave the Commission power to make a banning order if it exercised the discretion inherent in the word "may" used in s. 829 to exercise it.
Unless there is a contrary provision in, or a contrary inference to be drawn from, the Law, I do not consider that the Tribunal is limited to reviewing the banning order only on the basis of s. 829(a) of the Law. The role of the Tribunal is to decide whether the decision that was made was, on the material available to the Tribunal, objectively the correct or preferable decision. In doing so, it must itself take each of the three steps before deciding whether or not the making of the banning order was the correct or preferable decision. As it is not limited to the material available to the Commission in 1997, it may appear that, objectively, the correct or preferable decision on the first step was not that reached by the Commission. It may be that the correct or preferable decision is that none of the circumstances set out in s. 829 applies or that one or more applies. If the former, the decision to make the banning order would have to be set aside. If the latter, the next step would have to be taken.
There is no contrary provision as such in the Law but, on behalf of Mr Wharton, it was submitted, in effect, that there is a contrary inference in s. 837. That provides for certain procedural steps to be followed and they are intended to ensure that Mr Wharton had a reasonable opportunity to present his evidence and make his submissions. Had the Commission not complied with s. 837, the banning order would presumably have been susceptible to being set aside on an application being made under the ADJR Act. Is it required to comply with it in relation to each of the grounds upon which it may be satisfied when completing the first step towards making a banning order? It seems to me that it is not. Section 837 requires the Commission to comply with procedural fairness in the form it stipulates. That requirement precedes the making of the banning order in the first place but there is no suggestion that it must be repeated in reviewing the decision to make it. Once the banning order is made and it is subject to review, it is up to the Tribunal to ensure that there is procedural fairness for both parties. This it does by ensuring that both parties exchange documentary evidence that is relevant and statements of their witnesses as well as statements of the issues, facts and contentions as they see them. The fact that any hearing of the application is ultimately heard in public and the Commission's decision was made only after Mr Wharton had the opportunity to present his evidence and make his submissions in private seems to me not to affect the final result.
For these reasons, I:
(1)decides that, in the review of the respondent's decision dated 15 September, 1997, the respondent is not limited to the ground specified in s. 829(a) of the Corporations Law; and
(2)adjourns further consideration to a telephone directions hearing to be held on Monday, 24 June, 2002 at 9.30 am.
I certify that the forty-one preceding paragraphs are a true copy of the reasons for the decision herein of
Miss S A Forgie (Deputy President),Signed: …………………………………..
Paul Paczkowski AssociateOn the Papers 8 March, 2002
Date of Decision 7 June, 2002
Counsel for the Applicant Mr Davies
Solicitor for the Applicant Oakley Thomson & Co
Counsel for the Respondent Mr GladmanSolicitor for the Respondent Australian Securities & Investments Commission
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