Williams v Companies Auditors Disciplinary Board

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FEDERAL COURT OF AUSTRALIA

Williams v Companies Auditors Disciplinary Board [2025] FCA 629

File number(s): NSD 1544 of 2023
Judgment of: PERRY J
Date of judgment: 18 June 2025
Catchwords:

ADMINISTRATIVE LAW – application for review of decision of the Companies Auditors Disciplinary Board to cancel the applicant’s registration as a company auditor – whether the Board failed to have regard to relevant considerations including the applicant’s responses and the applicant’s professional qualifications, experience and reputation – what inferences can be drawn from the failure to refer to particular evidence – whether the decision was legally unreasonable by reason of the absence of expert evidence and the evidence of a Quality Control Review

PRACTICE AND PROCEDURE – relief sought pursuant to s 39B of the Judiciary Act 1903 (Cth) – whether s 39B excluded by operation of s 1337A of the Corporations Act 2001 (Cth)

CORPORATIONS – whether sub-s 1292(1)(d)(i) of the Corporations Act 2001 (Cth) permits the Companies Auditors Disciplinary Board to discipline an auditor vicariously for work done by others – whether the Board is entitled to rely on its own expertise – whether expert evidence from an auditor was required – statutory features of the Board – whether the Board adopted a presumption of cancellation

COSTS – whether s 223 of the Australian Securities and Investments Commission Act 2001 (Cth) limits costs to the costs of the hearing under s 1294 of the Corporations Act 2001 (Cth) and excludes the costs generally of the application under s 1292
Legislation:

Acts Interpretation Act 1901 (Cth), s 25D

Administrative Appeals Tribunal Act 1975 (Cth), s 43(2B)

Administrative Decisions (Judicial Review) Act 1977 (Cth), s 9(1)

Australian Securities and Investments Commission Act 2001 (Cth), ss 210A, 216, 218(1)(b), 223, 227B,

Corporations Act 2001 (Cth), ss 324AF, 336, 1292, 1294, 1296(1), 1337B

Federal Court of Australia Act 1976 (Cth), ss 21, 22, 23

Legislation Act 2003 (Cth)

Legislative Instruments Act 2003 (Cth)

Migration Act 1958 (Cth), s 501CA(4)

Corporations Regulations 2001 (Cth)

Veterinary Surgeons Act 1923 (NSW)
Cases cited:

AgriWealth Capital Ltd v Australian Financial Complaints Authority Ltd [2023] FCAFC 118; (2023) 299 FCR 319

Albarran v Members of the Companies Auditors and Liquidators Disciplinary Board [2007] HCA 23; (2007) 231 CLR 350

Atlantis Properties Pty Ltd v Cameron [2005] QCA 297; Caribbean Steel Co Ltd v Price Waterhouse (a firm) [2013] UKPC 18; [2013] 4 All ER 338

Attorney-General (NSW) v Quin [1990] HCA 21; (1990) 170 CLR 1

BOY19 v Minister for Immigration and Border Protection [2019] FCA 574; (2019) 165 ALD 39

Buttrose v Attorney-General of New South Wales [2015] NSWCA 221; (2015) 324 ALR 562

CMW23 v Companies Auditors Disciplinary Board [2024] FCA 407

Collector of Customs v Pozzolanic Enterprises Pty Ltd [1993] FCA 456; (1993) 43 FCR 280

Comcare v Kemp [2020] FCA 865

Davies v Australian Securities Commission [1995] FCA 674; (1995) 59 FCR 221

Dean-Willcocks v Companies Auditors and Liquidators Disciplinary Board [2006] FCA 1438

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Details
Case
[2025] FCA 629
Decision Date

CaseChat Overview and Summary

The case of Williams v Companies Auditors Disciplinary Board involved Mr Reginald Lance Williams, a registered company auditor, who sought judicial review of a decision by the Companies Auditors Disciplinary Board (the Board) to cancel his registration as a company auditor. The Board had cancelled Mr Williams' registration under section 1292 of the Corporations Act 2001 (Cth) on the ground that he had not adequately and properly carried out his duties as an auditor in relation to a particular audit. The Board also ordered Mr Williams to pay the costs of the Australian Securities and Investments Commission (ASIC) under section 223 of the Australian Securities and Investments Commission Act 2001 (Cth). Mr Williams challenged the validity of both the cancellation decision and the costs decision, seeking declarations that they were invalid and an injunction against ASIC enforcing the costs decision as a debt.

The primary legal issues before the court were whether the Board had erred in cancelling Mr Williams' registration for work done by other persons, whether the Board failed to take into account relevant considerations including Mr Williams' professional qualifications and reputation, and whether the Board's decision was legally unreasonable due to the absence of expert evidence and the reliance on its own expertise. Additionally, the court had to consider whether the Board had the power to award the costs of the application or was limited to awarding the costs of the hearing. The court had to assess whether the Board's actions fell within the scope of section 1292(1)(d)(i) of the Corporations Act, and whether any presumption of cancellation by ASIC was contrary to law.

The court dismissed Mr Williams' application for judicial review. It held that the Board did not err in cancelling Mr Williams' registration for work done by other persons, as the Board was entitled to rely on its own expertise and the professional standards relevant to the scope of section 1292(1)(d)(i) of the Corporations Act. The court also found that the Board had taken into account relevant considerations, including Mr Williams' responsibilities as engagement partner and the majority of work being carried out by other persons. The court concluded that the Board's decision was not legally unreasonable given the expert evidence and the Board's reliance on its own expertise. Furthermore, the court found that the Board had the power to award the costs of the application, not just the costs of the hearing, under section 223 of the ASIC Act.

The court dismissed Mr Williams' application and ordered that he pay the costs of ASIC as agreed or assessed. This decision confirmed the Board's authority to cancel a company auditor's registration based on its own expertise and the relevant professional standards, and upheld the Board's power to award the costs of the application.

Orders

Orders of the court

1. The application is dismissed.

2. The applicant is to pay the second respondent’s costs as agreed or assessed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

On 5 December 2018, the Board cancelled Mr Williams’ registration as a company auditor under s 1292 of the Corporations Act (the Cancellation Decision) on the ground that it was satisfied that Mr Williams had not adequately and properly carried out or performed his duties as an auditor with respect to the Audit. The Board further ordered under s 223 of the ASIC Act that Mr Williams pay the costs of the second respondent in this proceeding, ASIC, fixed in the sum of $200,000 (the Costs Decision). The Board gave extensive reasons (the Cancellation Reasons) for the Cancellation Decision and separate reasons for the Costs Decision (the Costs Reasons). By his amended originating application for judicial review, Mr Williams seeks declarations that the Cancellation Decision and the Costs Decision are invalid for jurisdictional error, together with injunctive relief enjoining ASIC from enforcing the Costs Decision as a debt in the District Court of Queensland, on the following grounds. (1)In deciding to cancel Mr Williams’ registration on the ground that he had failed to carry out or perform adequately and properly the duties of an auditor in relation to the Audit: (a)the Board acted on an incorrect construction of sub-s 1292(1)(d)(i) of the Corporations Act by cancelling Mr Williams’ registration for work carried out by other persons (Ground 3(a)); and (b)the Board failed to take into account relevant and material considerations, being Mr Williams’ responsibilities as engagement partner and the fact that the majority of work was carried out by other persons (Ground 3(b));(c)the Board’s decision lacked an evident and intelligible justification and was therefore legally unreasonable (Ground 3(e)):(i)in the absence of expert evidence from a registered company auditor either with practical experience acting as an engagement partner, or in auditing substantial pooled mortgage schemes, as to what a reasonably competent auditor would have done; and/or(ii)the Board was not entitled to rely on its own specialist expertise and the expert evidence of Mr Chris Rea was insufficient; and/or (iii)the Board did not account for expert evidence that was tendered in relation to the firm’s quality control framework.(2)In the alternative, in deciding to cancel Mr Williams’ registration, rather than suspending him for a limited period or dealing with him under s 1292(9) of the Corporations Act:(a)the Board failed to take into account relevant and material considerations, namely: (i)the facts underpinning what the Board described as Mr Williams’ “Engagement Partner Response” (Ground 4(b)) and “Limited User/Limited Purpose Response” and/or the Subsequent Maddison Audit response (Ground 4(d));(ii)Mr Williams’ professional qualifications, experience and reputation as a registered auditor (Ground 4(c)); and/or(b)ASIC applied a presumption of cancellation contrary to law (Ground 4(f)).(3)The Costs Decision is invalid because:(a)the Cancellation Decision is invalid (Ground 5); or, in the alternative,(b)the Board had no power to award costs of the application and was only entitled to award the costs of the hearing (Ground 6).

Ratio Decidendi

Legal Principle Established

The applicant, Mr Reginald Lance Williams, was a registered company auditor under the Corporations Act 2001 (Cth). On 7 December 2012, Mr Williams signed an unqualified audit opinion on behalf of Williams Partners Independent Audit Specialists (WPIAS) for financial statements of the unregistered managed investment scheme known as the LM Managed Performance Fund (LM) for the financial year ending 30 June 2012 (the Audit). The first respondent, the Companies Auditors Disciplinary Board, is established by the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) and must, by operation of s 203 of the ASIC Act, include members who have expertise in accounting and business. Under sub-s 1292(1)(d)(i) of the Corporations Act, the Board has power, among other things, to cancel or suspend a person’s registration as an auditor if it is satisfied on an application by the Australian Securities and Investments Commission (ASIC) or the Australian Prudential Regulation Authority (APRA) that the person failed to carry out, or perform adequately or properly, the duties of an auditor. As I shortly explain, it is well-established that professional standards are relevant to the scope of sub-s 1292(1)(d)(i): Dean-Willcocks v Companies Auditors and Liquidators Disciplinary Board [2006] FCA 1438; (2006) 59 ACSR 698 at [26] (Tamberlin J). On 5 December 2018, the Board cancelled Mr Williams’ registration as a company auditor under s 1292 of the Corporations Act (the Cancellation Decision) on the ground that it was satisfied that Mr Williams had not adequately and properly carried out or performed his duties as an auditor with respect to the Audit. The Board further ordered under s 223 of the ASIC Act that Mr Williams pay the costs of the second respondent in this proceeding, ASIC, fixed in the sum of $200,000 (the Costs Decision). The Board gave extensive reasons (the Cancellation Reasons) for the Cancellation Decision and separate reasons for the Costs Decision (the Costs Reasons). By his amended originating application for judicial review, Mr Williams seeks declarations that the Cancellation Decision and the Costs Decision are invalid for jurisdictional error, together with injunctive relief enjoining ASIC from enforcing the Costs Decision as a debt in the District Court of Queensland, on the following grounds. (1)In deciding to cancel Mr Williams’ registration on the ground that he had failed to carry out or perform adequately and properly the duties of an auditor in relation to the Audit: (a)the Board acted on an incorrect construction of sub-s 1292(1)(d)(i) of the Corporations Act by cancelling Mr Williams’ registration for work carried out by other persons (Ground 3(a)); and (b)the Board failed to take into account relevant and material considerations, being Mr Williams’ responsibilities as engagement partner and the fact that the majority of work was carried out by other persons (Ground 3(b));(c)the Board’s decision lacked an evident and intelligible justification and was therefore legally unreasonable (Ground 3(e)):(i)in the absence of expert evidence from a registered company auditor either with practical experience acting as an engagement partner, or in auditing substantial pooled mortgage schemes, as to what a reasonably competent auditor would have done; and/or(ii)the Board was not entitled to rely on its own specialist expertise and the expert evidence of Mr Chris Rea was insufficient; and/or (iii)the Board did not account for expert evidence that was tendered in relation to the firm’s quality control framework.(2)In the alternative, in deciding to cancel Mr Williams’ registration, rather than suspending him for a limited period or dealing with him under s 1292(9) of the Corporations Act:(a)the Board failed to take into account relevant and material considerations, namely: (i)the facts underpinning what the Board described as Mr Williams’ “Engagement Partner Response” (Ground 4(b)) and “Limited User/Limited Purpose Response” and/or the Subsequent Maddison Audit response (Ground 4(d));(ii)Mr Williams’ professional qualifications, experience and reputation as a registered auditor (Ground 4(c)); and/or(b)ASIC applied a presumption of cancellation contrary to law (Ground 4(f)).(3)The Costs Decision is invalid because:(a)the Cancellation Decision is invalid (Ground 5); or, in the alternative,(b)the Board had no power to award costs of the application and was only entitled to award the costs of the hearing (Ground 6).