Whiteman and Australian Securities and Investments Commission - [2025] ARTA 211

Whiteman and Australian Securities and Investments Commission [2025] ARTA 211 (11 March 2025)
Applicant/s:  Philip Whiteman
Respondent:  Australian Securities and Investments Commission
Tribunal Number:                2023/7536

Tribunal:General Member Darian-Smith
Place:Sydney
Date:11 March 2025

Decision:The Tribunal refuses the Applicant’s application for an order under s.32(2) of the Administrative Review Tribunal Act 2024 (Cth) staying the operation or implementation of the decision of the Respondent dated 14 August 2023.

......................[SGD]..................................................
General Member Darian-Smith
Catchwords
CORPORATIONS – S.206F Corporations Act disqualification order – application for order staying operation or implementation of a disqualification order – factors relevant to the grant of a stay – prospects of success – consequences for applicant of refusal of a stay – the public interest – application for stay order refused
Legislation
Administrative Appeals Tribunal 1975 (Cth) s.41
Administrative Review Tribunal Act 2024 (Cth) s.32
Corporations Act 2001 (Cth) ss.206F, 344, 533
Australian Securities and Investments Commission Act 2001 (Cth) s.1
Cases
Re Scott and Australian Securities and Investments Commission [2009] AATA 798
Technical Education Australia Pty Ltd and Australian Skills Quality Authority [2018] AATA 3047
Birdseye and Tax Practitioners Board [2020] AATA 1250
Australian Securities and Investments Commission v Administrative Appeals Tribunal (2009) 181 FCR 130
Re Nguyen and Australian Securities and Investments Commission [2011] AATA 398
Greenfield Education Pty Ltd and Australian Skills Quality Authority [2018] AATA 4210
Panganiban and Australian Securities and Investments Commission [2016] AATA 703
Mclean and Australian Securities and Investments Commission [2016] AATA 22
Re HIH Insurance; ASIC v Adler [2002] NSWSC 483; 42 ACSR 80
Batros and Australian Securities and Investments Commission [2016] AATA 519
Australian Securities and Investments Commission v Forge [2007] NSWSC 1489
Re Poidevin and Australian Securities and Investments Commission [2018] AATA 124; (2018) 74 AAR 137
Secondary Materials
Explanatory Memorandum to the Administrative Review Tribunal Bill 2023
Statement of Reasons
BACKGROUND

On 14 August 2023, a delegate of the Respondent (ASIC) made an order under s.206F of the Corporations Act 2001 (Cth) (Corporations Act) disqualifying the Applicant (Mr Whiteman) from managing corporations for a five-year period (Disqualification Order)[1]. The Disqualification Order was supported by Reasons for Decision prepared by ASIC’s delegate (Disqualification Reasons). The Disqualification Order and the Disqualification Reasons together constitute the decision under review (Reviewable Decision).
[1] T2.
The Disqualification Order came about as the result of Mr Whiteman’s role as a director of five companies which were wound up in the period from 8 February 2017 until 14 June 2017. The five companies in question are:
(a)A & S Services Australia Pty Ltd ACN 165 857 321 (A&S Services), wound up on 14 June 2017.
(b)Bolton & Swan Pty Ltd ACN 153 647 360 (Bolton & Swan), wound up on 14 June 2017.
(c)ACN 147 341 991 Pty Ltd ACN 147 341 991 (formerly DNV Accountants and Business Advisors Pty Ltd (DNV), wound up on 14 June 2017.
(d)Armstrong & Shaw Pty Ltd ACN 148 949 375 (Armstrong), wound up on 8 February 2017. and
(e)Ainslie Harding & Wood Solicitors Pty Ltd ACN 607 552 741 (AHW), wound up on 14 June 2017.
(Collectively the Companies)
The Companies operated as a group of advisory businesses. The Disqualification Reasons describe the operation of the group as follows:
“Armstrong was a pre-insolvency and advisory business that was subsequently conducted by A&S Services, Bolton & Swan was a law firm specialising in, amongst other things, insolvency law that was subsequently conducted by AHW and DNV was a registered tax agent that provided tax and accounting advice.”[2]
[2] T2 Disqualification Reasons, [18].
The Companies were the subject of a “Notice to demonstrate” which was served on Mr Whiteman on 30 March 2023 under s.206F(b)(i) of the Corporations Act.[3] The ASIC letter attaching the Notice to demonstrate set out some “areas of concern” to ASIC and invited either written or oral submissions in response from Mr Whiteman.
[3] T3, T4.
On 11 April 2023, Mr Whiteman responded to the Notice to demonstrate and requested an extension of time to make written submissions. ASIC granted Mr Whiteman a few extensions of time to provide written submissions up until 11 August 2023. As Mr Whiteman had still failed to provide submissions on that date, ASIC’s delegate was satisfied that Mr Whiteman, having due regard to his medical issues and that 4 and a half months had been given in which to respond, had been provided with an opportunity to be heard for the purposes of s.206F(1)(b)(ii) Corporations Act.[4] The Disqualification Order with Disqualification Reasons was issued by ASIC’s delegate on 14 August 2023.
[4] T2, Reasons for Decision [16].
The Companies were the subject of reports lodged by the liquidator[5] of the Companies under s.533(1) of the Corporations Act which concerned the inability of the Companies to pay their debts.
[5] Mr A Yeo of Pitcher Partners.
ASIC’s delegate was satisfied that although Mr Whiteman was not registered as a director or officer of the Companies, he nonetheless controlled the Companies and acted as a “shadow director” of the Companies at the relevant times.
The evidence supporting ASIC’s delegate’s finding as to Mr Whiteman’s shadow directorships and relied upon by ASIC in making the Reviewable Decision, is set out in the Disqualification Reasons as follows:
(a)A&S Services, at paragraphs [20] to [37].
(b)Bolton & Swan, at paragraphs [38] to [51].
(c)DNV, at paragraphs [52] to [60].
(d)Armstrong, at paragraphs [61] to [67]. and
(e)AHW, at paragraphs [68] to [75].
The Disqualification Order became the subject of the Applicant’s application for review dated 12 October 2023 (Application for Review).[6]
[6] T1.
The Disqualification Order and the Notice of disqualification from managing corporations have been in effect from 14 August 2023 or shortly thereafter.
Mr Whiteman filed, and relies upon, written submissions supporting his stay application dated 28 January 2025 (with supporting Exhibits A-X inclusive) (Applicant’s Submissions). ASIC raised an objection to the Tribunal taking Exhibit E to the Applicant’s Submissions into evidence. The objection was based on the Harman[7] implied undertaking as to confidentiality and was upheld by the Tribunal with the effect that Exhibit E was not admitted into evidence for the purpose of the stay application. The Applicant’s Submissions were otherwise received by the Tribunal.
[7] Harman v Secretary of State for the Home Department [1983] 1 AC 280. See also Hearne v Street (2008) 235 CLR 125, [96].
ASIC filed, and relies upon, written submissions on the stay application dated 13 February 2025 (Respondent’s Submissions).
LEGISLATIVE PROVISIONS
The relevant provisions of the Corporations Act which relate to ASIC’s power to make a banning order and concerning the lodging of a liquidator’s report about the inability of a company to pay its debts are set out in ss. 206F and 533 respectively. The relevant parts of those sections are set out below:
“206F ASIC’s power of disqualification
Power to disqualify
(1)ASIC may disqualify a person from managing corporations for up to 5 years if:
(a) within 7 years immediately before ASIC gives a notice under paragraph (b)(i):
(i) the person has been an officer of 2 or more corporations; and
(ii) while the person was an officer, or within 12 months after the person ceased to be an officer of those corporations, each of the corporations was wound up and a liquidator lodged a report under subsection 533(1) …about the corporation’s inability to pay its debts; and
(b) ASIC has given the person:
(i) a notice in the prescribed form requiring them to demonstrate why they should not be disqualified; and
(ii) an opportunity to be heard on the question; and (c) ASIC is satisfied that the disqualification is justified…
Grounds for disqualification
(2)In determining whether disqualification is justified, ASIC:
(a) must have regard to whether any of the corporations mentioned in subsection (1) were related to one another; and
(b) may have regard to:
(i) the person’s conduct in relation to the management, business or property of any corporation; and
(ii) whether the disqualification would be in the public interest; and
(iii) any other matters that ASIC considers appropriate…”
“533 Reports by liquidator
(1) If it appears to the liquidator of a company, in the course of a winding up of the company, that:
(a) a past or present officer or employee, or a member or contributory, of the company may have been guilty of an offence under a law of the Commonwealth or a State or Territory in relation to the company; or
(b) a person who has taken part in the formation, promotion, administration, restructuring, management or winding up of a company: (i) may have misapplied or retained, or may have become liable or accountable for, any money or property of the company; or (ii) may have been guilty of any negligence, default, breach of duty or breach of trust in relation to the company; or
(c) the company may be unable to pay its unsecured creditors more than 50c in the dollar;
the liquidator must
(d) as soon as practicable, and in any event within 6 months, after it so appears to him or her, lodge a report with respect to the matter and state in the report whether he or she proposes to make an application for an examination or order under section 597; and
(e) give ASIC such information and give to it such access to and facilities for inspecting and taking copies of any documents as ASIC requires.”
TRIBUNAL’S POWER TO GRANT A STAY
The Administrative Appeal Tribunal’s power to stay was found in s.41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act). The equivalent provision in the Administrative Review Tribunal Act 2024 (Cth) (ART Act) is found in s.32(2), which reads:
“However, on application by a party to a proceeding for review of a reviewable decision, the Tribunal may make an order staying or otherwise affecting the operation or implementation of the decision if the Tribunal considers that it is desirable to do so for the purpose of ensuring the effectiveness of the review.”
It is important to bear in mind that s.32(2) operates as an exception to the General rule which is stated in s.32(1) of the ART Act, as follows:
“The making of an application to the Tribunal for review of a reviewable decision does not affect the operation of the decision or prevent the taking of action to implement the decision.”
The Tribunal must observe the pre-conditions set out in s.32(7) of the ART Act before it makes an order staying a reviewable decision, which are to give the parties to the application for review an opportunity to make submissions in relation to the making of a stay order[8] and to ensure the Tribunal “has taken into account the interests of any person who may be affected by the review of the decision.”[9]
[8] ART Act s.32(7)(a).
[9] ART Act s.32(7)(b).
The Explanatory Memorandum to the Administrative Review Tribunal Bill makes it clear that although the wording in s.32 of the ART Act is different in some respects to the wording of s.41 of the AAT Act, those changes were made to reflect “modern drafting practices” and “not to affect the operation or effect of the provision.”[10] It follows that the authorities relevant to the principles to be applied in respect of s.41 of the AAT Act, remain relevant when considering s.32 of the ART Act.
[10] Explanatory Memorandum to the Administrative Review Tribunal Bill, [339].
CONSIDERATION OF FACTORS RELEVANT TO THE GRANT OF A STAY
The range of factors relevant to the Tribunal’s consideration of a stay are well established by the decision in Re Scott andAustralian Securities and Investments Commission[11] (Scott), and the Tribunal cases which have followed it.[12] The 6 matters listed by Downes J. in Scott are as follows:
(a)The prospects of success;
(b)The consequence for the applicant of the refusal of a 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.[13]
[11] [2009] AATA 798.
[12] See for example Technical Education Australia Pty Ltd and Australian Skills Quality Authority [2018] AATA 3047 at [59]; Birdseye and Tax Practitioners Board [2020] AATA 1250.
[13] [2009] AATA 798, [4].
The Tribunal notes that the Scott factors should not be treated as a complete checklist, as that risks losing sight of the discretion which the Tribunal is being asked to exercise when considering whether it is “desirable” to award a stay “for the purpose of ensuring the effectiveness of the review.” The Tribunal adopts what was said in Technical Education Australia Pty Ltd and Australian Skills Quality Authority by SM Cameron:
“Whilst these matters identified by Downes J in Re Scott are relevant to the exercise by the Tribunal of the discretion conferred upon it by section 41(2), they are not a complete code or a “checklist” that limits or fetters the exercise of such discretion.”[14]
[14] [2018] AATA 3047 at [60].
Further, the facts and circumstances of the case, including the nature and content of the reviewable decision, will affect the respective weighting to be given to each of the factors under consideration with respect to the granting of a stay.[15] Scott factors (a)-(c) are the main factors to be considered in determining this stay application and are considered in greater detail below.
[15] Hopfner and Tax Practitioners Board [2019] AATA 851, [7].
The Full Federal Court, in Australian Securities & Investments Commission v Administrative Appeals Tribunal[16] (ASIC v AAT), provided guidance to the Tribunal when making an order under the former s.41(2) of the AAT Act, as to whether “it is desirable to do so after taking into account the interests of any persons who may be affected by the review” (now expressed in s.32(2) of the ART Act as “for the purpose of ensuring the effectiveness of the review”). The interests of the persons affected are to be considered in the context of the statutory scheme under which the decision under review was made.[17]
[16] (2009) 181 FCR 130.
[17] (2009) 181 FCR 130, [51] - [54], [56] - [57].
Specifically, in the context of making banning orders under the Corporations Act, Downes and Jagot JJ said:
“[C]areful consideration...must be given by the AAT in any exercise of power under s.41(2) of the AAT Act to the balance of competing rights and interests struck by Parliament as embodied in the terms of the Corporations Act, particularly the balance between the rights and interests of the recipient of the banning order and of the public including existing and potential future clients of the recipient of the banning order. As we have said, the scheme which the provisions of the Corporations Act embody--with the potential making of a banning order to remain private unless and until ASIC decides to make such an order having given the recipient an opportunity to be heard—is not mere statutory background or a neutral factor in the process of the formation of the required opinion about what is desirable under s.41(2) of the AAT Act. The scheme which Parliament has established in the Corporations Act, and the public interest in the right of the market to know relevant information as soon as practicable, must be treated as a fundamental element in the decision-making process required under s.41(2) of the AAT Act.”[18]
[18] (2009) 181 FCR 130, [71].
The consideration of the public interest in the Tribunal’s deciding upon a stay application in the context of a banning order is recognised in the authorities as not only a relevant consideration but an important and often critical consideration.[19]
[19] See for example Re Nguyen and Australian Securities and Investments Commission [2011] AATA 398, [26] - [27].
STAY FACTOR (A) PROSPECTS OF SUCCESS
The Tribunal’s consideration of the Applicant’s prospects of success for the purpose of determining the stay application does not require the Tribunal to conduct a preliminary hearing of the review application (on the evidence then available). As was explained in Greenfield Education Pty Ltd and Australian Skills Quality Authority[20], by SM Poljak:
“The authorities establish that a consideration of the prospects of success of an application and so the merits of a substantive application must not involve the Tribunal undertaking a full consideration of those merits. While it is neither necessary or appropriate for me to determine the substantive matter on an interlocutory application, I must be satisfied that that the applicant has some prospects of success.”[21]
[20] [2018] AATA 4210.
[21] [2018] AATA 4210, [7].
It follows that the Tribunal must satisfy itself that the Applicant’s prospects of success are high enough to clear the threshold of “some prospects of success” before a stay can be granted.
The central finding in the Disqualification Reasons that Mr Whiteman acted as a shadow director of each of the Companies is rejected by Mr Whiteman. He states that his case on the merits will “seek to highlight serious procedural and evidentiary flaws underpinning” the Disqualification Reasons. Mr Whiteman contends that, at the substantive hearing of his application for review, he:
“[W]ill demonstrate that ASIC relied on impugned evidence derived from prior investigations conducted under the Phoenix Taskforce and the Serious Financial Crime Taskforce—investigations marred by improper practices, including witness manipulation, suppression of exculpatory evidence, and systemic abuses of process.”[22]
[22] Applicant’s Submissions, page 1.
The contentions of the parties on the prospects of success factor are essentially a debate about the strength of the evidence relied upon by ASIC to support each of the six “concerns” identified by ASIC in the Notice to demonstrate and elaborated upon in the Disqualification Reasons. As previously noted, it is not required of the Tribunal in determining an interlocutory application for a stay, that it conduct a full consideration of the merits.
As the Tribunal stated in Panganiban and Australian Securities and Investments Commission[23]:
“Consideration of an applicant’s prospects of obtaining a more favourable outcome in the review proceedings must take into account the potentially incomplete awareness of all material issues, the state and quality of the available primary evidence, and the prospect of additional relevant material.”[24]
These considerations “require an appropriate degree of caution” in evaluating prospects on an interlocutory stay application. That evaluation in this case sensibly involves a high-level analysis of Mr Whiteman’s case in relation to the shadow director issue in respect of the Companies and his response to each of the six “concerns”.
[23] [2016] AATA 703.
[24] [2016] AATA 703, [8].
Mr Whiteman’s primary submission on prospects is that ASIC wrongly concluded that he controlled the Companies. He seeks, amongst other things, to challenge the evidence of witnesses relied upon by the liquidator of the Companies in writing the reports under s.533(2) of the Corporations Act, and in turn ASIC’s delegate’s reliance on those liquidator’s reports.
The Applicant’s Submissions (read with the relevant response in the Respondent’s Submissions) refer to aspects of the evidence concerning the conclusion that Mr Whiteman was in control of each of the Companies, which evidence Mr Whiteman seeks to impugn. The Tribunal notes the following by way of example:
(a)A&S Services: Mr Whiteman has questioned the reliance of the delegate on statutory declarations made by Ms S [Redacted] and Mr V [Redacted].[25] He also questions ASIC’s reliance on the liquidator’s report which in turn relied upon the evidence obtained in the compulsory examinations conducted by the liquidator.[26]
(b)Bolton & Swan: Mr Whiteman states that as a non-lawyer he could not have controlled a company operating a legal practice. He further seeks to attack any evidence from Ms Y [Redacted], his former de-facto partner, which may have been relied upon by ASIC in determining whether he was in control of Bolton & Swan.[27]
(c)DNV: Mr Whiteman disputes the acceptance by ASIC’s delegate of the evidence of five witnesses, obtained in the liquidator’s examination, that he was in control of DNV. ASIC notes that no contradictory evidence has been given at this time.[28]
(d)Armstrong: Mr Whiteman dispute’s ASIC’s delegate’s reliance upon the conclusion in the liquidator’s report that Mr Whiteman controlled Armstrong, whilst bankrupt. He further attacks the reliance by the liquidator in his report on evidence given by the witnesses Ms S [Redacted] , Mr B [Redacted] and Mr H [Redacted] .[29] and
(e)AHW: ASIC’s delegate found that AHW was a continuation of the business operated by Bolton & Swan. Mr Whiteman’s complaint about the evidence relied upon by ASIC concerning his control of AHW is, like his complaint about the Bolton & Swan evidence, that he disputes any reliance by ASIC upon the evidence of Ms Y [Redacted].[30]
[25] Applicant’s Submissions, [2(a)(i)]; Respondent’s Submissions, [25] – [26].
[26] T3.3.4.
[27] Applicant’s Submissions, [2(a)(ii)]; Respondent’s Submissions, [27] – [28].
[28] Applicant’s Submissions, [2(a)(iii)]; Respondent’s Submissions, [29].
[29] Applicant’s Submissions, [2(a)(iv)]; Respondent’s Submissions, [30].
[30] Applicant’s Submissions, [2(a)(v)]; Respondent’s Submissions, [31].

Mr Whiteman also contests the evidentiary basis upon which ASIC’s delegate’s findings in relation to each of the six “concerns”[31] is biased.
[31] Described in Respondent’s Submissions, [12(d)].
In relation to Concern 1: Controlling Companies, Mr Whiteman’s position is that ASIC should not have relied on the declarations of any of Ms S [Redacted], Mr V [Redacted], Mr S [Redacted], Mr B [Redacted] or Ms Y [Redacted]. Mr Whiteman says that these declarations are false. Mr Whiteman also says that relevant affidavit evidence of Mr H [Redacted], to the effect that Mr H [Redacted] had effective control of DNV and Armstrong, was not considered by ASIC in reaching the Disqualification Decision.[32] The affidavit of Mr H [Redacted] is not before the Tribunal at present but appears in any event to have been disavowed by Mr H [Redacted].[33] There is also a debate between the parties about Mr Whiteman’s “limited” role as Business Development Manager of the Companies, and whether that role is inconsistent with ASIC’s finding that he was a shadow director of the Companies.[34]
[32] Applicant’s Submissions, [2(a)(viii)]; Respondent’s Submissions, [36] – [37].
[33] Respondent’s Submissions, [38].
[34] Respondent’s Submissions, [39].
In relation to Concern 2: Significant Debts, Mr Whiteman’s position is that he was not involved in the incurring of those debts and that it was the registered directors of the Companies who were responsible for the debts, and it is now the liquidator who must deal with them. ASIC’s response is that Mr Whiteman has effectively conceded that the debts were incurred by the Companies and are not able to be paid.[35]
[35] Applicant’s Submissions, [2(a)(ix)]; Respondent’s Submissions, [43] – [45].
In relation to Concern 3: Misuse of Funds, the subject of this concern is the alleged misuse of funds belonging to the Companies to service mortgages over properties held for Mr Whiteman’s personal benefit or that of family members. Mr Whiteman contends that ASIC should have taken account of certain evidence of Mr D G [Redacted] to the effect that Mr Whiteman was not a signatory for the relevant bank accounts. ASIC’s response is that a factual finding on the question of who the signatory on the relevant accounts was will not address the point about personal benefit and potential breach of director’s duties (if Mr Whiteman was a shadow director) under ss. 180, 181 and 182 of the Corporations Act.[36]
[36] Applicant’s Submissions, [2(a)(x)]; Respondent’s Submissions, [46] – [49].
In relation to Concern 4 Poor Financial Records and Concern 5 Phoenix Activity, Mr Whiteman’s position is that he had no duty to maintain financial records as he was not a director of the Companies and could not have been involved in phoenix activity for the same reason. These issues will likely fall to be determined in accordance with the conclusion reached on review about whether Mr Whiteman was acting as a shadow director.[37]
[37] Applicant’s Submissions, [2(a)(xi)], [2(a)(xii)]; Respondent’s Submissions, [50].
In relation to Concern 6: DNV Fraudulently Accessing Client Monies, Mr Whiteman refers to an affidavit of Mr P H [Redacted], which he says is to the effect that Mr H [Redacted] was the sole director of Armstrong and DNV for a five-year period. He further denies that Mr K [Redacted] was pressured by him to change client details to enable payments to be made to DNV.[38] There is insufficient evidence presently before the Tribunal to form a view as to the likely outcome on this issue at the substantive hearing.
[38] Applicant’s Submissions, [2(a)(xiii)]; Respondent’s Submissions, [51].
Mr Whiteman refers in the Applicant’s Submissions to medical issues suffered by him in the period since 2010, including severe hyperthyroidism and cognitive impairment and a heart attack on 26 April 2016.[39] The submission Mr Whiteman makes as to the relevance of that medical history is as follows:
“My medical limitations further preclude any suggestion that I fulfilled the role of a shadow director during this period. In fact, I was medically incapable to perform the role of a director or to completely control any company.”[40]
[39] Applicant’s Submissions, [2(a)(xiv)] and Annexure Q.
[40] Applicant’s Submissions, [2(a)(xiv)].
The Respondent’s Submissions address the medical evidence set out in Annexure Q to the Applicant’s Submissions in some detail.[41] ASIC submits that none of the reports and other medical records produced deal directly with the question of whether Mr Whiteman could act as a director in the period from November 2010 until the dates in 2017 when the liquidator was appointed to each of the Companies (Relevant Period).
[41] Respondent’s Submissions, [52] – [54].
This aspect of Mr Whiteman’s case may evolve further for the purposes of a substantive hearing, but on the present state of the evidence before the Tribunal it cannot be satisfied that Mr Whiteman’s medical conditions precluded him from being a director in the Relevant Period.
Mr Whiteman contends that he has “a great likelihood of success on merits”.[42] ASIC’s position is that Mr Whiteman’s prospects of succeeding on the application for review “is not strong”[43] and he “has insufficient prospects of success to justify the grant of a stay.”[44]
[42] Applicant’s Submissions, [1].
[43] Respondent’s Submissions, [67].
[44] Respondent’s Submissions, [58].
ASIC hold that view because of the evidentiary difficulties which they perceive Mr Whiteman will have in overcoming the conclusion reached in the Disqualification Reasons that he acted as a shadow director of each of the Companies. ASIC describes those evidentiary difficulties in the following terms:
“In order to make out his assertion that he did not act as a shadow director of the Companies, the applicant contends that every statement of every witness relied on by ASIC, and every relevant conclusion reached by the Liquidators, is false.”[45]
[45] Respondent’s Submissions, [24].
While I am satisfied that Mr Whiteman may have some prospects of success on his substantive review, I am not satisfied on the evidence currently before the Tribunal that those prospects are sufficient to justify the grant of a stay.
STAY FACTOR (B) CONSEQUENCES FOR THE APPLICANT OF THE REFUSAL OF A STAY
Mr Whiteman submits that granting him a stay would “have a profound personal impact by addressing the psychological toll caused by this prolonged legal battle and give me a renewed sense of purpose through the ability to continue my livelihood”.[46] He stated that his current plan is to start up a new accounting partnership, although it was not clear on the evidence before me whether that business would necessarily involve a corporate structure and require Mr Whiteman to be a company director.
[46] Applicant’s Submissions, [7].
Mr Whiteman says that if he is not granted a stay, this will cause him irreparable reputational damage, professional harm and extract an emotional and psychological toll.[47]
[47] Applicant’s Submissions, [9].
ASIC’s position is that Mr Whiteman has provided little evidence of harm suffered by him to date or evidence as to how the granting of a stay will assist his psychological condition.[48] ASIC further submits:
“There is also a failure to address the fact that the applicant has already been the subject of a banning order since August 2023, which has been publicly advertised. There is also no engagement with the fact that the applicant was a bankrupt for much of the period since the Reviewable Decision was made. In that way, there is no sense in which the applicant was financially dependent on acting as a director of a company and has lost that source of income.”[49]
[48] Respondent’s Submissions, [61].
[49] Respondent’s Submissions, [62].
Reputational harm of some description and the hardship attendant upon that harm is inherent in the making of a banning order. However, as the Tribunal has observed “[i]n and of itself that is hardly ever a sufficient basis for securing a stay.”[50] It can be relevant when considered in the context of other matters raised but will generally not weigh heavily against the public protective purpose of the Disqualification Order.
[50] Mclean and Australian Securities and Investments Commission [2016] AATA 22, [22].
The public protective purpose of a banning order will normally take precedence over personal considerations. In Re HIH Insurance: ASIC v Adler[51], Santow J said of banning orders:
“The public protective purpose must clearly be paramount. That precludes a simple balancing exercise. While the disqualification order should not be disproportionate to the public protective purpose it is intended to serve, for that indeed would be punitive, it would subvert that public purpose if private interest considerations were to prevail or preclude an order which went no further than necessary to serve that public purpose.”[52]
[51] [2002] NSWSC 483; 42 ACSR 80.
[52] [2002] NSWSC 483, [80]; 42 ACSR 80, 105.
In its oral submissions, counsel for ASIC pointed to that public protective purpose and of the need to protect the public from Mr Whiteman, particularly in view of his stated intention of going back into business in future.
There is a lack of strong evidence of the consequences of the Disqualification Order for Mr Whiteman of the kind that he would need to discharge the heavy onus on an applicant for the stay of a banning order “to show that their interests outweigh the interests of the public.”[53] The practical reality is that Mr Whiteman has now been subject to the Disqualification Order for over 18 months and he has been living with the adverse consequences of the Reviewable Decision. I am satisfied that this factor weighs less in favour of the grant of a stay than the public protective factor weighs in favour of refusing the stay.
[53] Batros and Australian Securities and Investments Commission [2016] AATA 519, [23].
STAY FACTOR (C) THE PUBLIC INTEREST
ASIC submits that its power to make the Disqualification Order must be seen in the context of the objectives of ASIC dictated for it by s.1(2) of the Australian Securities and InvestmentsCommission Act 2001 (Cth) (ASIC Act), which says:
“(2) In performing its functions and exercising its powers, ASIC must strive 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; and
(b) promote the confident and informed participation of investors and consumers in the financial system; and
(d) administer the laws that confer functions and powers on it effectively and with a minimum of procedural requirements; and
(e) receive, process and store, efficiently and quickly, the information given to ASIC under the laws that confer functions and powers on it; and
(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.”
It has been noted above that the paramount purpose of the Disqualification Order is the public protective purpose. In addition, there is a general deterrence purpose, explained in Australian Securities and Investments Commission v Forge[54] by White J in the following terms:
” A disqualification order is protective of the public for the period of disqualification against misconduct by the person disqualified. However, that is not its only purpose. The object of general deterrence is also of great importance. That object is served by the public disapproval of the impugned conduct being marked not only by a declaration that the conduct has contravened the Act, but by an order for disqualification of the contravener from managing a corporation either for a fixed period or for life. The shame or embarrassment which accompanies such an order is not designed as punishment, although it might have that effect, but serves as a general deterrent to others who might be tempted to breach their duties as directors or officers of a company.”[55]
[54] [2007] NSWSC 1489.
[55] [2007] NSWSC 1489, [103].
Assuming that a reviewable decision has been made on a proper basis, the perception of the public that ASIC is carrying out its regulatory function in protecting the public and the market will carry “considerable weight in considering whether a stay should be granted.”[56]
[56] Re Poidevin and Australian Securities and Investments Commission [2018] AATA 124, [70]; (2018) 74 AAR 137, 154.
Mr Whiteman submits that “granting a stay poses minimal risk to ASIC or the public, as I am no longer an undischarged bankrupt, have no current involvement in corporate management, and am willing to comply with any conditions…”.[57]
[57] Applicant’s Submissions, [9].
In response, ASIC contends that Mr Whiteman’s own evidence has identified a potential risk to the public if Mr Whiteman has the benefit of a stay. That risk is:
“The applicant’s own submission is that he wishes to establish an accounting partnership. The delegate’s findings against the applicant, including that he improperly took funds from the Companies he controlled, and that he engaged in phoenix activity to avoid liabilities to creditors, weighs heavily against the grant of a stay. This takes on particular impetus in circumstances where the applicant has recently been discharged as a bankrupt.”[58]
[58] Respondent’s Submissions, [67].
On balance this factor weighs against the granting of a stay.
STAY FACTOR (D) CONSEQUENCES FOR THE RESPONDENT IN CARRYING OUT ITS REGULATORY FUNCTION
The Tribunal accepts that the presence of Mr Whiteman in the market without restriction as to his ability to control a company is potentially prejudicial to ASIC’s ability to meet its objectives in s.1(2) of the ASIC Act and weighs slightly against the granting of a stay.
STAY FACTOR (E) WHETHER THE APPLICATION FOR REVIEW WOULD BE RENDERED NUGATORY IF A STAY WERE NOT GRANTED
Mr Whiteman has been disqualified from managing corporations for a five-year period under the terms of the Disqualification Order. From Mr Whiteman’s point of view, if he wishes to continue to challenge this outcome, there is a need for the Application for Review to be heard and determined, irrespective of whether a stay is granted. It follows that this factor is not in play on this application for a stay.
CONCLUSIONS AND DECISION
The Disqualification Order has now been in place for approximately 18 months. A refusal by the Tribunal to grant a stay will have the effect of allowing that situation to continue until the determination of the Application for Review. The Tribunal will be working with the parties to facilitate the progressing of the Application for Review to a substantive hearing as quickly as that can be arranged.
I have considered and weighed up the factors relevant to the grant of a stay in this matter. I am not satisfied that it is desirable to make an order staying the operation or implementation of the Reviewable Decision for the purpose of ensuring the effectiveness of the review.
It follows that I have decided to refuse Mr Whiteman’s application for a stay order under s.32(2) of the ART Act.
Date of Hearing:  27 February 2025
Applicant:  Mr P. Whiteman (self-represented)
Counsel for the Respondent:            Mr C. Hibbard
Solicitors for the Respondent:          Mr G. Hanson, Mr A. Paciocco, ASIC