Wittensleger and Australian Securities and Investments Commission
[2015] AATA 902
•24 November 2015
Wittensleger and Australian Securities and Investments Commission [2015] AATA 902 (24 November 2015)
Division
TAXATION & COMMERCIAL DIVISION
File Number(s)
2014/2014 & 2014/2015
Re
Arden Wittensleger
APPLICANT
And
Australian Securities and Investments Commission
RESPONDENT
DECISION
Tribunal Senior Member CR Walsh
Date 24 November 2015 Place Perth The Tribunal affirms the decisions under review.
....(Sgd) CR Walsh....................................................................
Senior Member CR Walsh
CATCHWORDS
CREDIT ACTIVITIES – FINANCIAL SERVICES – Australian Securities and Investments Commission’s (ASIC’s) power to make a banning order permanently prohibiting applicant from engaging in any “credit activities” and providing any “financial services” – applicant convicted of 86 counts of gaining benefit by fraudulent means under s 409(1) of the Criminal Code (WA) – Tribunal cannot go behind a conviction - decisions under review affirmed
LEGISLATION
Australian Securities and Investments Commission Act 2001
Corporations Act 2001 – s 9 – s 760A - s 766A(1) – s 766B(1) - s 920A(1) – s 920A(1)(d) - s 920A(3) – s 920D
Criminal Code (WA) – s 409(1)National Consumer Credit Protection Act 2009 – s 5 – s 6 – s 7 – s 8 – s 9 - s 80(1) – s 80(1)(c) – s 80(1)(f) - s 80(6) – s 81(2) – s 83
CASES
Australian Securities Commission v Kippe (1996) 67 FCR 499
Minister for Immigration and Ethnic Affairs v Gungor (1982) 4 ALD 575
Minister for Immigration and Ethnic Affairs v Daniele (1981) 5 ALD 135
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Saffron v Federal Commissioner of Taxation (No 2) (1991) 30 FCR 578; 102 ALR 19Wittensleger v The State of Western Australia [2014] WASCA 205
SECONDARY MATERIALS
ASIC “Regulatory Guide 98 – Licensing: Administrative action against financial service providers” – 98.44 – 98.45 – Table 1 – Table 2
ASIC “Regulatory Guide 218 - Licensing: Administrative action against persons engaging in credit activities” – 219.53 – 218.55 – Table 1 – Table 2
REASONS FOR DECISION
Senior Member CR Walsh
24 November 2015
INTRODUCTION
On 23 August 2013, following a jury trial in the District Court of Western Australia, Mr Wittensleger was found guilty of 86 counts of gaining benefit by fraud, contrary to s 409(1) of the Criminal Code (WA) (Criminal Code), which provides:
(1)Any person who, with intent to defraud, by deceit or any fraudulent means –
…….
(c)gains a benefit, pecuniary or otherwise, for any person;
……
is guilty of a crime and is liable –
…….
(h) in any other case, to imprisonment for 7 years.
On 14 October 2013, Mr Wittensleger’s convictions were recorded and he was sentenced to a total term of imprisonment of eight years. [1]
[1] Mr Wittensleger is eligible for parole and his sentence was backdated to 23 August 2013 to take into account his period in custody prior to trial.
On 5 March 2014, the Australian Securities and Investments Commission (ASIC) decided to:
· make a banning order against Mr Wittensleger permanently prohibiting him from engaging in any “credit activities” pursuant to s 80(1) of the National Consumer Credit Protection Act 2009 (NCCP Act) (Credit Activities Decision); and
· make a banning order against Mr Wittensleger permanently prohibiting him from providing any “financial services” pursuant to s 920A(1) of the Corporations Act 2001 (Corporations Act) (Financial Services Decision).[2]
[2] Both banning orders were served on Mr Wittensleger on 13 March 2014 and are permanent as opposed to being for a specified period.
On 16 April 2014, Mr Wittensleger applied to the Tribunal for a review of both the Credit Activities Decision and the Financial Services Decision.
Mr Wittensleger appealed his convictions and sentence. On 7 November 2014, the Court of Appeal of the Supreme Court of Western Australia dismissed Mr Wittensleger’s appeal: see Wittensleger v The State of Western Australia [2014] WASCA 205.
Mr Wittensleger is currently serving his eight year sentence at Acacia Prison.
ANALYSIS
Background
Broadly, the 86 charges of gaining a benefit by fraudulent means arose as a result of the submission by Mr Wittensleger of 86 separate false loan applications in the period from 14 May 2009 to 13 July 2010.
More specifically, Mr Wittensleger and his company Nirranda Pty Ltd, trading as James Brae & Broderick (Nirranda), entered into a professional fee funding arrangement with Hunter Premium Funding Ltd (Hunter Premium), a company which provided short term funding to business clients, whereby clients of Mr Wittensleger’s accountancy practice could apply to Hunter Premium for a loan to cover his professional fees, enabling the clients to pay off these fees over time.
Mr Wittensleger was aware that Hunter Premium ceased offering this funding arrangement in 2008. However, in that knowledge, Mr Wittensleger continued to submit applications directly to a single Hunter Premium employee. Mr Wittensleger submitted applications that appeared to be for insurance premium funding when no such insurance policies actually existed. Applications were submitted with invoices that were found to be entirely without basis and for amounts that were invented by Mr Wittensleger.
Mr Wittensleger fraudulently obtained loans to the value of approximately $6.6 million from Hunter Premium. Later loans were obtained to meet repayments on the earlier loans, with a total of about $2.5 million remaining outstanding.
In sentencing, Judge Curthoys remarked:
You engaged in a deliberate and sustained fraud as a result of which you received the benefit of some six and a half million dollars. You prepared, signed and submitted 86 fraudulently prepared loan applications to one particular employer, Hunter Premium Funding Ltd, to obtain loans.
After the initial fraud, you took out further loans in order to make repayments on the initial loan that you'd taken out earlier from Hunter.
You were the director of Nirranda Pty Ltd, the trustee for the Wittensleger Family Trust trading as James Brae & Broderick. Hunter Premium Funding operated throughout Australia and provided short term funding, normally about 12 months for business clients. Up until late 2008, Hunter had two distinct funding products which you'd offered to approved customers.
The first of these products was professional fee funding, the second was insurance premium funding, and professional fee funding was a product that was offered to clients, primarily accountants and lawyers and therefore available to you as an accountant. Hunter offered these two products up until late 2008 and you as the operator of James Brae & Broderick, or your company had, from 2007, applied on behalf of some of your clients for fee funding loans from Hunter Premium. You'd entered into professional fee funding arrangement with Hunter Premium and that agreement set out the terms and condition associated with that.
Hunter made a commercial decision to withdraw the professional fee funding product from the market as a result of the Global Financial Crisis when that was deemed to be no longer commercially viable.
On 18 November 2008, the chief executive wrote to you and gave you 45 days' written notice for cancellation of the professional fee funding arrangement. You received that letter, you received notice of it and knew beyond (?) the letter as well and that is obvious from subsequent correspondence from you to Hunter that you could no longer apply for loans on behalf of your clients to cover professional fees.
In your subsequent dealings, you dealt solely with Mr Tony Miliac and in the full knowledge the professional fee funding agreement had been cancelled, you prepared, signed and forwarded directly to Mr Miliac and only to Mr Miliac applications for loans on behalf of purported clients including 86 separate false applications for loans which were the subject of the counts on the indictment and of which you were convicted.
There are basically three categories which you engaged in; first of all, those who were your existing clients, such as those associated with Mr Cvetkoski and Partington, those associated with Mr Carter, and several - those associated with yourself.
In the case of the first group, primarily those with whom you had some association, the invoices which you attached to the insurance premium funding applications were entirely bogus. There was no basis for them, and they were simply figures invented by you that could never in the circumstances of the fees which you had previously rendered to those clients have reached anything like that.
In relation to those to do with Mr Carter, you may have on occasions delivered fees in that level. But it was clear that there was no basis for the invoices that related to these fees. And in the case of your own - those associated with you, such as JBB Tax and Accounting Malaga Pty Ltd, again there was simply no basis for those invoices. When you did supply them, they were completely bogus. You knew at all times that the - there was no basis for the insurance premium, the basis upon which the forms were filled in.
You eventually ran afoul of your own deceits. Obviously as time went on the loans the subject of the counts on the indictment were never paid by the borrowers named because they were - although they may have been clients of yours or associated with you, in most cases there was no money coming in from them.
So you were taking further loans from Hunter and engaging in the same fraud to repay those. And eventually the scheme fell apart when it was discovered by Hunter. It had run from about 14 May 2009 right up until your conviction on the last count, which was 13 July 2010. And you knew at all times you signed and forwarded the loan applications that Hunter Premium was no longer offering professional fee funding loans. Your entire conduct was completely deceitful.
The total amount of fraudulently obtained loans was in the region of about $6.5 million. Some of the later loans were used to repay earlier ones. And the total amount outstanding to Hunter as a result of these particular charges was about - so far as we are able to ascertain, about $2.5 million.
It is well-established that the Tribunal cannot go behind a conviction and examine the facts on which it is based: Minister for Immigration and Ethnic Affairs v Gungor (1982) 4 ALD 575; Minister for Immigration and Ethnic Affairs v Daniele (1981) 5 ALD 135; Saffron v Federal Commissioner of Taxation (No 2) (1991) 30 FCR 578; 102 ALR 19 at 581 [22]. Consequently, in deciding these review applications Tribunal must accept the facts as found by Judge Curthoys in his sentencing remarks, as set out immediately above.
Credit Activities Decision
Section 80 of the NCCP Act, titled “ASIC’s power to make a banning order”, states:
(1) ASIC may make a banner order against a person:
………
(c) for a natural person – if the person is convicted of fraud; or
………
(f)if ASIC has reason to believe that the person is not a fit and proper person to engage in credit activities; [Emphasis added]
Section 80(6) of the NCCP Act provides that ASIC is not required to offer a person a hearing before making a banning order if the grounds for making the banning order includes that the person has been convicted of a “serious fraud”. Section 5 of the NCCP Act defines the expression “serious fraud” to mean an offence involving fraud or dishonesty, being an offence either against a law of the Commonwealth, or of a State or Territory and is punishable by imprisonment for life or for a period, or maximum period, of at least 3 months.
Mr Wittensleger’s main contention is that, although not expressly stated in s 80(1) of the NCCP Act, it is Parliament’s intent that ASIC’s legislative power in s 80(1) of the NCCP Act to make a banning order against a person engaging in credit activities be limited to persons actively engaging in credit activities or a person who is likely to do so in the future.[3] Mr Wittensleger’s position is that as he was not actively engaged in credit activities at the time of the Credit Activities Decision, ASIC had no power to make the Credit Activities Decision (i.e. to make a banning order against him under s 80(1) of the NCCP Act).
[3] Mr Wittensleger’s “Response to Facts, Issues and Contentions”, received 24 September 2015, at 1.1, 2.3, 2.4, 2.5, 3.1, 3.3, 3.5, 3.6 and 3.7.
Mr Wittensleger’s contention is misconceived. Section 80(1)(c) of the NCCP Act clearly states that ASIC may make a banning order against a person if the person is a natural person who is “convicted of fraud”. As stated above, in 2013, Mr Wittensleger was convicted of 86 counts of “serious fraud” (as defined in s 5 of the NCCP Act and for the purposes of s 80(6) of the NCCP Act) pursuant to s 409(1) of the Criminal Code. These convictions were upheld on appeal. Consequently, ASIC may make a banning order against Mr Wittensleger pursuant to s 80(1)(c) of the NCCP Act. Section 80(1) of the NCCP Act does not require the person against whom ASIC makes a banning order to be actively engaged in credit activities at the time it makes a banning order.
Section 6 of the NCCP Act [4] provides that a person engages in a “credit activity” when the person provides a “credit service”. Section s 7 of the NCCP Act states that a person provides a “credit service” if the person provides “credit assistance” to a “consumer”[5] or acts as an “intermediary”. Section 8 of the NCCP Act, titled “Meaning of credit assistance”, states:
A person provides credit assistance to a consumer if, by dealing directly with the consumer or the consumer’s agent in the course of, as part of, or incidentally to, a business carried on in this jurisdiction by the person or another person, the person:
(a)suggest that the consumer apply for a particular credit contract with a particular credit provider; or
…….
(d)assists the consumer to apply for a particular credit contract with a particular credit provider; or
[4] See also s 5 of the NCCP Act
[5] The word “consumer” is defined in s 5 of the NCCP Act.
Section 9 of the NCCP Act, titled “Meaning of acting as an intermediary”, states:
A person acts as an intermediary if, in the course of, as part of, or incidentally to, a business carried on in this jurisdiction by the person or another person, the person:
(a)acts as an intermediary (whether directly or indirectly) between a credit provider and a consumer wholly or partly for the purposes of securing a provision of credit for the consumer under a credit contract for the consumer with the credit provider; or
It is clear from the facts set out in the sentencing remarks of Judge Curthoys, which the Tribunal must accept, that Mr Wittensleger was in fact actively engaged in credit activities (i.e. in providing “credit assistance” to consumers) either directly, or as an “intermediary”, at the time ASIC made the banning order against him (i.e. at the time of the Credit Activities Decision): see paragraph 11 above and also the Court of Appeal’s decision in Wittensleger v The State of Western Australia [2014] WASCA 205. Consequently, even if Mr Wittensleger’s construction of s 80(1) of the NCCP Act is correct, which the Tribunal does not accept, ASIC would nevertheless have been entitled to issue the banning order against Mr Wittensleger under s 80(1) of the NCCP Act.
Further, even if ASIC was not entitled to make a banning order against Mr Wittensleger pursuant to s 80(1)(c) of the NCCP Act as a natural person who has been “convicted of fraud”, which the Tribunal does not accept, it appears likely that ASIC would nevertheless be entitled to make such an order against Mr Wittensleger under s 80(1)(f) of the NCCP Act on the basis that he is “not a fit and proper person to engage in credit activities”. In making this observation, the Tribunal notes the sentencing remarks of Judge Curthoys (set out above in paragraph 11) as well as the following sentencing remarks of Judge Curthoys:
In terms of your personal circumstances, there was a pre-sentence report prepared. You were born on 25 July 1969. You're aged 44. You continue to deny your offending. That notes that you appeared to be driven by status and recognition. The report notes your earlier conviction, and goes on to note the psychological report, that your behaviour appears to be driven by financial gain and status, entitlement, and poor moral development.
And the following risk factors were identified. Previous offending for financial gain, relationship instability, possible personality disorder, and possible employment instability. And although not a - and I interpose to comment, although not a psychological assessment and there's no basis for it, in lay terms you appeared to be completely narcissistic, believing that you can do no wrong……
…….you were convicted on 20 September 1996 for 46 counts of stealing for which you received four years' imprisonment on each of the charges which were to be served concurrently.
There is a psychological report. That again notes you continue to deny your offending, and you have been and are completely lacking in remorse. You appear to have come from a very stable background, very hardworking parents.
The report notes that your parents have a longstanding marriage spanning over 50 years. And you report it's a constructive union, and both your parents are stable individuals.
You described your childhood as unremarkable. There were no traumas or victimisation reported. You concluded school at the end of year 12, and commenced a degree in business studies at Curtin University, but transferred to Melbourne for this course. After six months you then returned to Curtin and concluded your studies in the area of business, economics and finance. And it would appear that you have continued to maintain further studies.
You built a successful business, at which stage you were - after you were convicted for stealing as an agent, you re-established the business. At one stage you were earning between 3 to 500,000 a year. But plainly that wasn't enough. And there's no doubt that greed is a very motivating factor in your conduct.
I've noted the relationship. I notice that you've asserted that the relationship was highly dysfunctional. And I notice that is your reporting of that relationship.
There's no evidence of substance abuse. There's no evidence of any major mental health problems, impulsivity or concerns in relation to your interpersonal relationships and support network. You have had every benefit really of academic education, intelligence, ability, a stable family. You've had really all the gifts that this society is capable of bestowing. A good income, but still that's not enough for you.
I note that you in the report are critical of - that your lawyer didn't prepare for the complexities of this case. Having viewed Mr Watters' preparation, that assertion by you has no basis for it. The case against you was extremely strong. And your lawyer's alleged lack of preparation has no substance. And again it is typical of your behaviour, such as the comments during the trial when you asserted that it was Hunter who had been deceitful and not you.
You have a tendency to blame others. And you continue to deny your responsibility for your behaviour. Perhaps if at some stage in your life you had acknowledged some responsibility for your behaviour, you wouldn't be sitting in the dock now awaiting sentence.
The report notes that - further that your drivers appear to be financial gain and status, entitlement, and poor moral development. And it suggests that you put the importance of financial gain over any other considerations, including personal integrity and legal parameters.
The risk factors appear to be previous offending for financial gain and status, relationship instability, and a possible personality disorder. And you're now likely to have employment instability due to your offending and the loss of your business. And you've continued to offend, as the report notes, despite previous legal consequences.
In terms of the aggravating factors, of course you obtained funds over a long period of time from Hunter Premium. When you were in financial problems, rather than acknowledging them, you continued in that behaviour. Your conduct did involve careful planning and execution. It was sustained behaviour over the period of the charges. It did result in a benefit to you of a large amount of money and a loss.
You haven't explained what has become of the money or made any attempt to it and the stolen money, one can only assume, was used to fund an affluent lifestyle. It wasn't offending driven by any mental illness or psychological difficulty and it ended only because Hunter Finance became aware of what was happening as a result of a change in management. Although you weren't charged with causing a detriment, plainly there has been a loss to Hunter Premium, or at the very least to their insurers.
I note in the submissions that it is said that you have donated money to charities. I have to say, I don't see any virtue in stealing money or defrauding money from people to give it to other people and charities and make out that you're a big fellow because you do it and I don't find that to be, in this case, in any way mitigatory.
I have read the submissions which have been submitted by both the State and your counsel carefully and considered all the factors in them. I have also read the references that have been filed on your behalf and I can only assume that the authors of those have really failed to appreciate your conduct and are unaware of your previous offending. They speak highly of you but that needs to be balanced against the conduct for which you have been convicted.
Your record plainly, having regard to the previous conviction and the term of imprisonment for that, is a serious one. Of course, you're not to be punished for that but it makes personal deterrence a very significant factor in this case.[6]
[6] See also the Court of Appeal’s decision in Wittensleger v The State of Western Australia [2014] WASCA 205.
The Tribunal notes that ASIC’s powers under the Australian Securities Investments Commission Act 2011 (ASIC Act) are the subject of policy guidelines issued by ASIC. Of particular relevance here, is “Regulatory Guide 218- Licensing: Administrative action against persons engaging in credit activities” (RG 218) which the Tribunal, standing in the shoes of ASIC, is entitled to and should have regard to unless, in the particular circumstances of a given case, there are cogent reasons for not doing so[7].
[7] Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, at 640-641 per Brennan J.
RG 218.53 states that ASIC is likely to make a banning order against a person where there are “serious concerns” about the person and, in particular, where there is a need to protect consumers.
RG 218.55 provides that, in determining whether or not to pursue administrative action, such as a banning order, against a person, consideration must be given to the particular facts of the individual case. At the end of RG 218, there are two tables. Table 1 sets out a non-exhaustive list of factors which might be taken into account in determining whether or not to pursue administrative action. Those factors include:
· the nature and seriousness of a person’s conduct, including, for instance, the duration of the conduct and any dishonesty;
· the person’s conduct subsequent to any misconduct, including, for instance, any demonstrated contrition;
· the previous regulatory record of the person; and
· any mitigating factors advanced by the person.
Section 81(2) of the NCCP Act provides that a banning order may prohibit the person against whom it is made from engaging in credit activity permanently or for a specified period. Mr Wittensleger’s banning order under s 80(1) of the NCCP Act is “permanent”.
Table 2, at the end of RG 218, states that, among other things, the following matters might be relevant to the making of a “permanent” banning order:
· dishonesty;
· continued, knowing and wilful contraventions of the law and disregard for legal obligations;
· previous contraventions of the law;
· serious incompetence or irresponsibility;
· a likelihood that the person will engage in similar contravening conduct in the future;
· significant adverse impact on consumer confidence;
· engaging in fraud; and
· engaging in a pattern of persistent contraventions that indicates systemic failure or a general lack of understanding of and regard for compliance.
Based on the facts set out in the sentencing remarks of Judge Curthoys and RG 218, the Tribunal considers that ASIC’s decision to make a “permanent” banning order against Mr Wittensleger pursuant to s 80(1) of the NCCP Act (i.e. rather than making a banning order against Mr Wittensleger for a specified period) is the correct and preferable decision[8]. In reaching this finding, the Tribunal notes the following observation of the Full Federal Court in Australian Securities Commission v Kippe (1996) 67 FCR 499 at 508:
…..Although a banning order has the consequence of excluding an individual; from acting as a representative of a dealer or investment adviser, the making of such an order is not designed to punish or impose a penalty on that person for an offence or contravention of any norm of conduct…
The immediate and direct legal effect intended by a banning order is not to impose a penalty or punishment on the person concerned, but to be preventative in that it removes a perceived threat to the public interest and to public confidence in the securities and futures industry [or credit activities industry] by removing that person from participation therein.
[8] See also the Court of Appeal’s decision in Wittensleger v The State of Western Australia [2014] WASCA 205.
Financial Services Decision
Section 920A of the Corporations Act, titled “ASIC’s power to make a banning order”, states:
(1) ASIC may make a banning order against a person, by giving written notice to the person, if:
………
(c) the person is convicted of fraud; or
(d)ASIC has reason to believe that the person is not of good fame or character; or [Emphasis added]
Section 920A(3) of the Corporations Act provides that ASIC is not required to offer a hearing, to the person the subject of the proposed banning order, before making the banning order if the grounds for making the banning order includes that the person has been convicted of a “serious fraud”. The expression “serious fraud” is defined on s 9 of the Corporations Act to mean an offence involving fraud or dishonesty, being an offence against an Australian law or any other law and punishable either by imprisonment for life or for a maximum period of at least 3 months.
Mr Wittensleger’s main contention is that, although not expressly stated in s 920A of the Corporations Act, it is Parliament’s intention that ASIC’s legislative power in s 920A(1) of the Corporations Act to make banning orders against persons providing financial services be limited to persons actively providing any financial services or persons who are likely to do so in the future.[9] Mr Wittensleger’s position is that as he was not actively providing any financial services at the time of the Financial Services Decision, ASIC had no power to make the Financial Services Decision (i.e. to make a banning order against him under s 920A(1) of the Corporations Act).
[9] Mr Wittensleger’s “Response to Facts, Issues and Contentions”, received 24 September 2015, at 1.1, 2.3, 2.4, 2.5, 3.1, 3.3, 3.5, 3.6 and 3.7.
Mr Wittensleger’s contention is misconceived. Section 920A(1) of the Corporations Act clearly states that ASIC may make a banning order against a person if “the person is convicted of fraud”. As stated above, in 2013, Mr Wittensleger was convicted of 86 counts of “serious fraud” (as defined in s 9 of the Corporations Act and for the purposes of s 920A(3) of the Corporations Act) pursuant to s 409(1) of the Criminal Code. These convictions were upheld on appeal. Consequently, ASIC may make a banning order against Mr Wittensleger pursuant to its discretion in s 920A(1)(c) of the Corporations Act. Section 920A(1) of the Corporations Act does not require the person against whom ASIC makes a banning order to be actively providing financial services at the time it makes a banning order.
Section 766A(1) of the Corporations Act states that a person provides a “financial service” if, among other things, they provide “financial product advice”.
Section 766B(1) states that “Financial product advice” means a recommendation or a statement of opinion, or a report of either of those things, that:
(a)is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or
(b) could reasonably be regarded as being intended to have such an influence.
It is clear from the facts set out in the sentencing remarks of the Judge Curthoys, which the Tribunal must accept, that Mr Wittensleger was in fact actively providing “financial services”, being “financial product advice”, at the time ASIC made the banning order against him (i.e. at the time of the Financial Services Decision): see also the Court of Appeal’s decision in Wittensleger v The State of Western Australia [2014] WASCA 205[10]. Consequently, even if Mr Wittensleger’s construction of s 920A(1) of the Corporations Act is correct, which the Tribunal does not accept, ASIC would nevertheless have been entitled to issue the banning order against Mr Wittensleger under s 920A(1) of the Corporations Act.
[10] It is arguable that Mr Wittensleger could also said to have been dealing in a “financial product” for the purposes of s 766C(1) of the Corporations Act but it is unnecessary for the Tribunal to determine this issue in the circumstances of this case.
Further, even if ASIC was not entitled to make a banning order against Mr Wittensleger pursuant to s 920A(1) of the Corporations Act as a person who has been “convicted of fraud”, which the Tribunal does not accept, the Tribunal considers it is likely that ASIC would nevertheless be able to make such an order against Mr Wittensleger under s 920A(1)(d) of the Corporations Act on the basis that it has “reason to believe” that Mr Wittensleger is “not of good fame or character”. In making this observation, the Tribunal notes the sentencing remarks of Judge Curthoys (see paragraphs11 and 20 above) and the Court of Appeal’s decision in Wittensleger v The State of Western Australia [2014] WASCA 205.
In this regard, the Tribunal also notes “Regulatory Guide 98 - Licensing: Administrative action against financial services providers” (RG 98), which the Tribunal, standing in the shoes of ASIC, is entitled and should have regard to unless, in the particular circumstances of a given case, there are cogent reasons for not doing so.[11]
[11] Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, at 640-641 per Brennan J.
RG 98.44 states that ASIC is likely to make a banning order against a person where there are “serious concerns” about the person and, in particular, where there is a need to protect the public.
RG 98.45 provides that, in determining whether or not to pursue administrative action, such as a banning order, against a person, consideration must be given to the particular facts of the individual case. At the end of RG 98, there are two tables. Table 1 sets out a non-exhaustive list of factors which might be taken into account in determining whether or not to take administrative action. Those factors include:
· the nature and seriousness of a person’s conduct, including, for instance, the duration of the conduct and any dishonesty;
· the person’s conduct subsequent to any misconduct, including, for instance, any demonstrated contrition;
· the previous regulatory record of the person; and
· any mitigating factors advanced by the person.
Section 920B(2) of the Corporations Act provides that a banning order may prohibit the person against whom it is made from providing a financial service permanently or for a specified period “unless ASIC has reasons to believe that the person is not of good fame and character”.
Table 2, at the end of RG 98, states that the following matters might be relevant to the making of a “permanent” banning order:
· dishonesty or intent to defraud;
· continued, knowing and wilful contraventions of the law and disregard for legal obligations;
· previous contraventions of the law;
· serious incompetence or irresponsibility;
· a likelihood that the person will engage in similar contravening conduct in the future; and
· significant adverse impact on consumer confidence.
Based on the facts set out in the sentencing remarks of Judge Curthoys and RG 98, the Tribunal considers that ASIC’s decision to make a “permanent” banning order against Mr Wittensleger pursuant to s 920A(1) of the Corporations Act (i.e. rather than making a banning order against Mr Wittensleger for a specified period) is the correct and preferable decision: see also paragraph 34 above (concerning the issue of whether Mr Wittensleger is a person of “good fame and character”) and the Court of Appeal’s decision in Wittensleger v The State of Western Australia [2014] WASCA 205.
In reaching this finding, the Tribunal notes s 760A(a) of the Corporations Act which provides that Chapter 7 of the Corporations Act, titled “Financial services and market” (and which contains s 920A(1) of the Corporations Act), is to promote, among other things:
(a)confident and informed decision making by consumers of financial products and services while facilitating efficiency, flexibility and innovation in the provision of these products and services; and
(b)fairness, honesty and professionalism by those who provide financial services; and
......
DECISION
For the above reasons, the Tribunal affirms the Credit Activities Decision and the Financial Services Decision.
Section 83 of the NCCP Act provides that ASIC may vary or cancel a banning order if it is “satisfied that it is appropriate to do so because of any change in any of the circumstances based on which ASIC made the order”, either on its own initiative or upon an application by the person against whom the order was made. Section 920D of the Corporations Act is in substantially similar terms to s 83 of the NCCP Act.
There is nothing preventing Mr Wittensleger from applying to ASIC in the future to have the banning orders varied or cancelled.
I certify that the preceding 44 (forty four) paragraphs are a true copy of the reasons for the decision herein of Senior Member CR Walsh ...(Sgd) A Tran.....................................................................
Administrative Assistant
Dated 24 November 2015
Date(s) of hearing 17 November 2015 Applicant In person Counsel for the Respondent Ms L Black Solicitor for the Respondent Mr M Povey
Australian Securities and Investments Commission
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