Worthley, J.F. v Australian Securities Commission

[1993] FCA 390

JOHN FREDERICK WORTHLEY v. AUSTRALIAN SECURITIES COMMISSION
No. SG32 of 1993
FED No. 390
Number of pages - 7
Administrative Law
(1993) 11 ACLC 610
(1993) 10 ACSR 645
(1993) 42 FCR 578
(1993) 30 ALD 39

COURT

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Gummow(1), Hill(1) and Cooper(1) JJ

CATCHWORDS

Administrative Law - application for judicial review brought more than eleven months after decision made, no document notifying decision furnished to person aggrieved - Court has jurisdiction to hear matter unless discretion formed under s.11(4) of the Administrative Decisions (Judicial Review) Act 1977 - that application was not made within a reasonable time - relation of exercise of discretion under s.11(1)(c) and s.11(4).

Corporations Law: s.597

Administrative Decisions (Judicial Review) Act 1977: ss.5, 11(1)(c), 11(3), 11(4), 11(5).

Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344; discussed.

Mercantile Mutual Life Insurance Co Ltd v Australian Securities Commission (1993) 112 ALR 463; applied.

HEARING

ADELAIDE, 13-14 May 1993

#DATE 11:6:1993, SYDNEY

Counsel and Solicitors for appellant: T Gray QC and R Whitington

instructed by Finlaysons

Counsel and Solicitors for respondent: J O'Halloran instructed by

Valdemar Malinaric

ORDER

THE COURT ORDERS THAT:

1. Appeal allowed

2. Orders of O'Loughlin J set aside.

3. Application remitted to O'Loughlin J for rehearing.

4. No order as to costs

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

GUMMOW, HILL AND COOPER JJ On 28 May 1991 the respondent, the Australian Securities Commission ("the Commission"), authorised Mr Richard Anthony Fountayne England ("Mr England") to make an application under s.597 of the Corporations Law to examine persons concerned with the affairs of Excel Finance Corporation Ltd (Receiver and Manager appointed) ("Excel"). Mr England was the Receiver and Manager of Excel, pursuant to an appointment made by Executor Trustee Australia Limited ("Executor Trustee") in its capacity as trustee for certain debenture holders pursuant to the terms of a debenture trust deed dated 19 January 1987. Pursuant to this authority, in due course, Mr England sought and obtained an order of this Court for the examination of John Frederick Worthley, the appellant ("Mr Worthley"), "on any matters relating to the management, administration and otherwise in relation to the affairs" of Excel. Mr Worthley was an audit partner in the accounting firm of KPMG Peat Marwick, the auditors of Excel, and was the partner in charge of that company's audit in a period relevant to the inquiry which Mr England sought to make.

1. Mr Worthley, on 22 May 1992, commenced proceedings against the Commission relying upon the Administrative Decisions (Judicial Review) Act 1977 ("the ADJR Act"), seeking judicial review of the Commission's decision to authorise Mr England to make an application under s.597 of the Corporations Law. That application also sought judicial review of what were said to be two further decisions. It is now accepted that these two additional so-called decisions were not, in fact, decisions to which the ADJR Act applied. It is accordingly unnecessary to refer further to them.

2. The application for judicial review followed shortly after the filing by Mr Worthley of a notice of motion in this Court on 6 May 1992, seeking an order discharging the earlier order made by the Court for the examination of Mr Worthley on the ground that that order had been obtained for an improper purpose.

3. The substantial basis put forward for judicial review of the Commission's authorisation is that the appointment of Mr England involved a reviewable error in that Mr England was the Receiver of Excel appointed by Executor Trustee, which company had, as at the time of the authorisation, a potential claim against Mr Worthley and his firm. Indeed on 28 May 1992, Executor Trustee instituted proceedings in the Supreme Court of South Australia, making Mr Worthley's fears an actuality.

4. The Commission filed a notice of objection to the competency of the Court to entertain the review on the ground that Mr Worthley was not a "person aggrieved" by the decision within the meaning of s.5 of the ADJR Act and on the further basis that the decision was not a "decision" within the meaning of that Act. The objection to competency was decided in favour of Mr Worthley having regard to the comments of the members of the Court in Mercantile Mutual Life Insurance Co Ltd v Australian Securities Commission (1993) 112 ALR 463 at 484, 496. Although the comments made in that case on the question of standing were clearly obiter and despite a faint attempt to argue otherwise, in our view they correctly state the law and it is clear his Honour was correct in dismissing the Commission's objection to competency.

5. Mr Worthley's application for judicial review, his notice of motion of 6 May 1992 and a number of interlocutory matters related to that notice of motion, all came on for hearing together before a judge of this Court (O'Loughlin J) who, inter alia, dismissed the notice of motion filed on 6 May 1992 and dismissed also Mr Worthley's application under the ADJR Act. Both of these matters, together with his Honour's rulings on certain other interlocutory matters, were then appealed to this Court, or, in the case of those matters where leave was required, leave was sought.

6. Because the Commission's authorisation of Mr England lay at the foundation of Mr Worthley's case, it seemed appropriate for us to consider first the appeal against the decision of the judge below dismissing Mr Worthley's application under the ADJR Act.

7. It may be said in a general way that the reason his Honour dismissed Mr Worthley's application under the ADJR Act was the delay in bringing that application. Before dealing with the submissions made to his Honour and his Honour's reasons for decision, it is convenient to set out the relevant statutory provisions.

8. Section 11(1)(c) of the ADJR Act provides that an application to the Court for an order of review:
   

"shall be lodged with a Registry of the Court and, in the case of an application in relation to a decision that has been made and the terms of which were recorded in writing and set out in a document that was furnished to the applicant, including such a decision that a person purported to make after the expiration of the period within which it was required to be made, shall be so lodged within the prescribed period or within such further time as the Court (whether before or after the expiration of the prescribed period) allows."

1. The "prescribed period", for the purposes of s.11(1), is defined in s.11(3) of the ADJR Act in the following terms:
   

"The prescribed period for the purposes of paragraph (1)(c) is the period commencing on the day on which the decision is made and ending on the twenty-eighth day after:

(a) if the decision sets out the findings on material questions of fact, refers to the evidence or other material on which those findings were based and gives the reasons for the decision - the day on which a document setting out the terms of the decision is furnished to the applicant; or

(b) in a case to which paragraph (a) does not apply-

(i) if a statement in writing setting out those findings, referring to that evidence or other material and giving those reasons is furnished to the applicant otherwise than in pursuance of a request under subsection 13(1) not later than the twenty-eighth day after the day on which a document setting out the terms of the decision is furnished to the applicant - the day on which the statement is so furnished;

(ii) if the applicant, in accordance with subsection 13(1), requests the person who made the decision to furnish a statement as mentioned in that subsection - the day on which the statement is furnished, the applicant is notified in accordance with sub-section 13(3) of the opinion that the applicant was not entitled to make the request, the Court makes an order under subsection 13(4A) declaring that the applicant was not entitled to make the request or the applicant is notified in accordance with subsection 13A(3) or 14(3) that the statement will not be furnished; or

(iii) in any other case - the day on which a document setting out the terms of the decision is furnished to the applicant."

1. Section 11(4) of the ADJR Act then deals with the case where there is no prescribed period. It provides:
   

"Where:

(a) no period is prescribed for the making of applications for orders of review in relation to a particular decision; or

(b) no period is prescribed for the making of an application by a particular person for an order of review in relation to a particular decision;

the Court may:

(c) in a case to which paragraph (a) applies - refuse to entertain an application for an order of review in relation to the decision referred to in that paragraph; or

(d) in a case to which paragraph (b) applies - refuse to entertain an application by the person referred to in that paragraph for an order of review in relation to the decision so referred to; if the Court is of the opinion that the application was not made within a reasonable time after the decision was made."

1. Sub-section (5) of s.11 of the ADJR Act then directs the Court to take into consideration in forming its opinion under s.11(4):
   

"(a) the time when the applicant became aware of the making of the decision; and

(b) in a case to which paragraph (4)(b) applies - the period or periods prescribed for the making by another person or other persons of an application or applications for an order or orders of review in relation to the decision, and may have regard to such other matters as it considers relevant."

1. Before us it was accepted by the Commission that Mr Worthley had not been furnished with a document falling within the terms of s.11(1)(c). There being no period otherwise prescribed, the matter thus fell within s.11(4) with the consequence that the Court could refuse to entertain an application by Mr Worthley for an order of review if the Court was of the opinion that the application was not made within a reasonable time after the decision was made. That concession was not so clearly made before his Honour below.

2. It appears that Mr Worthley first became aware of the making of the decision when he was provided, by Mr England's solicitors, with a copy of the authorisation. The decision was never furnished to him by the Commission. It seems, however, to have been suggested to his Honour that the question for decision by his Honour was whether a period of 28 days having expired from the time Mr Worthley learnt of the decision, his Honour should extend the time within which Mr Worthley's proceedings could be commenced. Clearly a submission in those terms confused the way s.11 operated. That confusion may ultimately have led his Honour into error.

3. In the judgment appealed against (now reported Re Excel Finance Corp Ltd; Worthley v Australian Securities Commission (1993) 10 ACSR 255) his Honour first pointed out that Mr Worthley's delay in bringing an application under the ADJR Act was "largely unexplained". His Honour then continued (at 285):
   

"The court has a discretion to extend the time for the filing of an application for an order of review: para 11(1)(c) of the ADJR Act. It is an unfettered discretion but it must be exercised judicially...".

1. Thereafter his Honour referred to the well-known judgment of Wilcox J in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344, where his Honour catalogued in a most useful way a number of matters which could be relevant to the exercise of discretion under s.11(1)(c). His Honour then referred to a submission, based presumably on s.11(1)(c), that the time had not yet started to run against Mr Worthley for the Commission had never furnished to him copies of the authority. His Honour then continued (at 286):
   

"There is, however, an alternative proposition which I favour. It is to this effect: the primary obligation upon an applicant for an order of review is to lodge an application `within the prescribed period' (para 11(1)(c)). That prescribed period is 28 days from (for example) `the day on which a document setting out the terms of the decision is furnished to the applicant'. (para 11(3)(a)). If, however, the decision is never furnished to the applicant, then there is no prescribed period and s.11(4) comes into operation;...".

1. Having pointed out that Mr Worthley had become aware of the Commission's decision in December 1991 and after referring to the decision of the Full Court of this Court in Newby v Moody (1983) 83 ALR 523 (a decision concerning s.11(4)), his Honour continued (at 286-287):
   

"In Mercantile Mutual Life Insurance Co Ltd v Australian Securities Commission Lockhart J indicated that if the question had arisen, he would have granted the applicant the required extension of time. But in that case the extent of the delay was only 21 days and that can hardly be compared with a period of 5 months. I have concluded therefore, as a threshold question, that the applicant should not be granted an extension of time within which to file his application.

The application for review should be summarily dismissed."

1. Mercantile Mutual was a case where the application was brought outside the prescribed period referred to in s.11(3). It is for that reason that Lockhart J referred to an extension of time, a reference to the power of the Court under s.11(1)(c). What O'Loughin J appears to do in the judgment appealed against and after the refererence to Mercantile Mutual, is to apply his mind to s.11(1)(c) and determine that Mr Worthley not be granted an extension of time within that sub- section. In so doing his Honour failed to consider the provisions of s.11(4), which clearly were the relevant provisions.

2. It is possible, as was suggested in argument, that his Honour adopted a construction of the Act, consistent with the submissions put to him, that Mr Worthley's case was foreclosed by the provisions of s.11(4) but nevertheless his Honour had an additional discretion under s.11(1)(c) which was then exercised adversely to Mr Worthley. But if this were the case, his Honour made no express reference to the exercise of his discretion under s.11(4) or the matters which his Honour took into account in exercising that discretion, if indeed he did so. A failure to provide reasons would itself involve an error of law.

3. The scheme of s.11 is clear. Section 11(1)(c) read together with s.11(3) circumscribes the time for the bringing of an application for an order for review to this Court by reference to the furnishing by the decision-maker of some document which informs the recipient precisely what it is that has been decided. The time allowed for the institution of proceedings will depend upon the nature of the document furnished to the applicant. That document will in some cases be a statement in writing furnished under s.13(1) of the Act. It may be a formal document which details findings on material questions of fact, refers to evidence or other material on which those findings were based and gives the reasons for the decision, albeit that it is not furnished pursuant to s.13(1). It may, on the other hand, be a less formal document. The minimum requirement is that the document in question record in writing the terms of the decision: cf Stergis v Federal Commissioner of Taxation (1989) 89 ATC 4442 at 4446.

4. Where, however, no document of a kind referred to in s.11(3) has been furnished to an applicant who commences proceedings, the provisions of s.11(1)(c) can have no application and the matter then falls to be dealt with under s.11(4) of the ADJR Act. Section 11(4) differs from s.11(3) in that a person seeking review of a decision is entitled to bring an application to the Court at any time. The application can not be regarded as incompetent because it was made outside the time prescribed by s.11(1)(c). However, the Court may, pursuant to s.11(4), refuse to entertain the case, notwithstanding that the application is already on foot, if it forms the opinion that the application was not made within a reasonable time after the decision was made.

5. Section 11(4) was the relevant section for consideration in the present case and the application was properly before the Court unless his Honour formed the opinion that the application was not made within a reasonable time after the making of the decision.

6. No doubt many of the matters relevant to the exercise of discretion under s.11(4) would be relevant to the exercise of discretion under s.11(1)(c). However, the matters relevant will not be precisely the same. For example, as Wilcox J points out in Hunter Valley Developments Pty Ltd v Cohen (supra), in exercising the discretion under s.11(1)(c), the Court starts with the "prima facie rule" that proceedings commenced outside the prescribed period will not be entertained (see at 348). Under s.11(4) on the other hand, the application is properly before the Court and the question is whether the Court should, having regard to the matters in s.11(5), refuse to entertain it.

7. It follows that in exercising the discretion conferred by the ADJR Act under s.11(1)(c), rather than under s.11(4), his Honour erred in law and the appeal accordingly must be allowed.

8. We note that the ground upon which the appeal has been allowed did not appear in the notice of appeal originally filed on behalf of Mr Worthley. The first time the matter was raised was in the written outline of submissions prepared for the appeal. We permitted amendment of the notice of appeal to deal with the matter. Once the matter was raised in argument little was said against the appeal being allowed. In all the circumstances we think that the proper order is that there be no order as to the costs of the appeal.

9. The orders will be:
   

1. Appeal allowed

2. Orders of O'Loughlin J set aside.

3. Application remitted to O'Loughlin J for rehearing.

4. No order as to costs