Queensland Building Services Authority v Australian Securities Commission [1997] FCA 141 (28 February 1997)

CATCHWORDS

Examination of persons about a corporation - review of decision of Australian Securities Commission - application by statutory authority to be granted status as an "eligible applicant" - test for "eligible applicant" - nature of review of administrative decisions - use of public examination to collect evidence for disciplinary proceedings.

Corporations Law Part 5.9

Queensland Building Services Act 1991

Cases referred to:

Whelan v Australian Securities Commission (No.1) (1993) 58 FCR 333

Hong Kong Bank of Australia Limited v Murphy (1992) 10 ACLC 1573

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

Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996)185 CLR 259

Hamilton v Oades [1989] HCA 21; (1988) 166 CLR 486

Cases applied:

Re Excel, Worthley v England (1994) 52 FCR 69

QUEENSLAND BUILDING SERVICES AUTHORITY v AUSTRALIAN SECURITIES COMMISSION

No QG 3018 of 1996

SPENDER J

BRISBANE

28 FEBRUARY 1997

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY No QG 3018 of 1996

GENERAL DIVISION

BETWEEN: QUEENSLAND BUILDING SERVICES AUTHORITY

Applicant

AND: AUSTRALIAN SECURITIES COMMISSION

Respondent

CORAM: SPENDER J

PLACE: BRISBANE

DATE: 28 FEBRUARY 1997

MINUTES OF ORDER

The Court orders:

1. The application is dismissed.

2. The respondent is to pay the Applicant's costs, to be taxed if not agreed.

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

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY No QB 3018 of 1996

GENERAL DIVISION

BETWEEN: QUEENSLAND BUILDING SERVICES AUTHORITY

Applicant

AND: AUSTRALIAN SECURITIES COMMISSION

Respondent

CORAM: SPENDER J

PLACE: BRISBANE

DATE: 28 FEBRUARY 1997

REASONS FOR JUDGMENT

This is an application by the Queensland Building Services Authority (`the QBSA'), a statutory authority established by s 5 of the Queensland Building Services Authority Act 1991 (`the Act'), to review a decision of the Australian Securities Commission (`the ASC') made on 24 July 1996, refusing the application made by the QBSA to the ASC to be authorised to make an application under Part 5.9 of the Corporations Law (`the Law') for the examination of persons about a corporation, Fairbrother Construction (Qld) Pty Ltd ACN 053 989 665 (In Liquidation) (`Fairbrother Construction').

Chapter 5 of the Law is headed "EXTERNAL ADMINISTRATION".

Division 1 of Part 5.9 of the Law is headed `Examining a person about a corporation'. Section 596A provides for a mandatory examination of a person. It provides:

` The Court is to summon a person for examination about a corporation's examinable affairs if:

(a) an eligible applicant applies for the summons; and

(b) the Court is satisfied that the person is an examinable officer of the corporation or was such an officer during or after the 2 years ending:

(i) if the corporation is under administration - on the section 513C day in relation to the administration; or

(ii) if the corporation has executed a deed of company arrangement that has not yet terminated - on the section 513C day in relation to the administration that ended when the deed was executed; or

(iii) if the corporation is being, or has been, wound up - when the winding up began; or

(iv) otherwise - when the application is made."

Section 596B allows for a discretionary examination and provides:

" (1) The Court may summon a person for examination about a corporation's examinable affairs if:

(a) an eligible applicant applies for the summons; and

(b) the Court is satisfied that the person:

(i) has taken part or been concerned in examinable affairs of the corporation and has been, or may have been, guilty of misconduct in relation to the corporation; or

(ii) may be able to give information about examinable affairs of the corporation.

(2) This section has effect subject to section 596A."

Both sections contemplate a two stage process. The first stage is the application by a person who is an "eligible applicant". The second stage requires the satisfaction by the relevant Court of the particular matters referred to in the two sections.

I am here concerned only with questions relevant to the first stage.

Section 9 of the Law provides that:

" `eligible applicant', in relation to a corporation, means:

(a) the Commission; or

(b) a liquidator or provisional liquidator of the corporation; or

(c) an administrator of the corporation; or

(d) an administrator of a deed of company arrangement executed by the corporation; or

(e) a person authorised in writing by the Commission to make:

(i) applications under the Division of Part 5.9 in which the expression occurs; or

(ii) such an application in relation to the corporation;"

The QBSA does not fall within any of the entities referred to in (a) to (d) inclusive of that definition. However, the QBSA complains that the ASC ought to have authorised it to make applications under ss 596A and 596B, pursuant to subparagraph (e).

The QBSA claims to be aggrieved by the failure of the ASC to authorise it in writing to make such an application because it says that it is otherwise unable to make applications pursuant to either s 596A or s 596B of the Law and no eligible person has applied for such orders. Moreover, the QBSA maintains that it would be in the public interest and in the interest of the creditors of Fairbrother Construction that examinations be held about that corporation's examinable affairs.

Fairbrother Construction was wound up pursuant to an order of the Supreme Court of New South Wales, Equity Division on 6 November 1995 on the application of the directors of the company. Mr Ian Campbell of Messrs Ernst & Young, Sydney, was appointed official liquidator of the company. On 19 December 1995, Mr Greg Lloyd of Messrs Ernst & Young (Townsville) was appointed official liquidator in Mr Campbell's stead by further order of the Supreme Court of New South Wales.

It is worth noting that prior to the winding up order, a creditor, Ingham Manufacturers Pty Ltd, petitioned the Supreme Court of Queensland on 19 October 1995 for the winding up of Fairbrother Construction, but Fairbrother Construction went into liquidation prior to Ingham Manufacturers Pty Ltd's application for winding up being heard.

On or about 28 February 1996 the liquidator advised the QBSA that he was "...now in a position to consider taking various actions against related parties to recover funds for unsecured creditors of the company". Accompanying that letter was the liquidator's report to creditors and a letter from Messrs Boulton Cleary & Kern, who were the solicitors for the liquidator, advising, among other things, possible actions within the liquidation.

On or about 1 April 1996, the liquidator wrote to the QBSA, first to confirm that there were no funds within the administration and secondly to request funding for the sum of $2,000-$3,000.00 so as to identify "any specific assets" of likely parties to recovery actions contemplated in the winding up. On or about 17 July 1996, the QBSA paid $3,000.00 to the liquidator in respect of the investigations which the liquidator had carried out.

By letter of 2 May 1996, the liquidator advised the QBSA of various searches he had conducted and to advise the results of further inquiries. That letter also provided a list of persons whom the liquidator suggested should be publicly examined. In addition to the directors of Fairbrother Construction, it included a Consultant/Manager of that corporation as well as directors of another company, Coreyson Pty Ltd as well as other associated entities, and other persons.

The solicitors for the liquidator wrote to the QBSA on 13 May 1996 advising that a public examination was appropriate in the circumstances, after which further consideration should be given to the actions to be commenced against the various parties involved in the liquidation and concerned in the affairs of the company.

On 24 May 1996, the solicitors for the QBSA wrote to the liquidator requesting further information with respect to the proposed parties to the public examination. In a letter dated the same day, the solicitors for the QBSA wrote to the liquidator confirming that their firm had instructions from the QBSA to undertake steps relating to the public examination of persons. Those steps were first to obtain the appropriate order from the Supreme Court at Brisbane under the Corporations Law to require the production of documents and the attendance of witnesses at the appropriate Magistrates Court; next, to have the relevant documentation produced to the court and last, to adjourn the public examination at that point, in order to assess the information and determine which persons should be publicly examined and what actions were then available to the liquidator, the QBSA, the Australian Taxation Office and other instrumentalities. The letter also indicated that notwithstanding that Townsville solicitors had been retained to act on behalf of the liquidator in the administration, Barwicks, the solicitors for the QBSA, were to conduct the application for the initial orders.

The liquidator replied on 27 May 1996. He indicated his understanding of QBSA's intention to proceed to obtain the orders for the production of documents and then to meet with the liquidator to discuss the future of both the public examination and any actions arising out of it. He stated:

" With respect, in my opinion, only a liquidator of the company has the authority pursuant to the Corporations Law to make application to the Court for the production of documents relating to the company and to the public examination of parties associated with the company. Accordingly, such instructions should come from the liquidator and not the QBSA."

On 3 June 1996, the QBSA applied to the ASC seeking written authorisation for the QBSA to become an "eligible applicant" within the meaning of s 9 and Part 5.9 of the Law.

The application by the QBSA indicated:

" ...it has become apparent to the Authority through its investigations and discussions with the liquidator that there are substantial grounds for concern (both in respect of breaches of the Corporations Law by directors, moneys owing to creditors and breaches of the Queensland Building Services Authority Act) surrounding the events leading up to the `collapse' of the Company."

The letter detailed a number of matters which lead to such concern. The application to the ASC by the QBSA recited:

" It is the Authority's belief that it will be in the public interest and assist the Authority to carry out its statutory duties (which includes the protection of the consumers and prosecution for breaches of the Act) that a public examination of relevant parties be held by the Authority pursuant to sections 596A and 596B of the Corporations Law. It is clear that there are matters of concern to the Authority as detailed above which relate to the Company's control and dealings within the building industry which have adversely impacted on, amongst others, consumers, subcontractors and other unsecured creditors.

Whilst the Authority's objective is, primarily, the recovery of moneys for creditors, there is a dual object to investigate and prosecute breaches of the Act. The Authority is of the view that if it was authorised as an `eligible applicant' by the Commission, then it can either conduct an examination for the benefit of all creditors and/or work in harmony with the liquidator if he decides to proceed with an examination.

As you will no doubt recognise, your authorisation in this instance will also assist the Authority in a great many number of other similar cases where building entities have been placed in liquidation owing many hundreds of thousands of dollars to creditors. The Commission is no doubt aware of many such instances and, is, we understand, investigating, by its own means, those matters."

(emphasis added)

Notwithstanding the passage emphasised, it seems to me that there is a basis in the material for thinking that the QBSA wanted to "take over", for its purposes and using its preferred firm of solicitors, any public examinations to be conducted. There is room still, in my view, for the QBSA to contribute in a useful way, both materially and by way of suggestion of areas of enquiry to be pursued, to public examinations by the liquidator.

A circular to creditors from the liquidator dated 7 June 1996 was received by the solicitors for the QBSA on 11 June 1996. That circular referred to an informal meeting of creditors on 6 June 1996 at which it was resolved that the liquidator:

" ...should immediately commence proceedings against various parties and consider undertaking limited public examinations of certain parties associated with the company for the purposes of these legal actions."

The circular noted that Mr Matthew Miller, General Manager of the QBSA was present at that meeting. The circular further advised that the estimated cost of pursuing the initial claims would be in the vicinity of $39,000.00 and invited all creditors "to consider funding these actions by contributing an amount calculated as representing five (5) per cent of their respective claims against the company".

On 19 June 1996, there was a discussion with a solicitor from the ASC concerning the QBSA's application to be authorised as an "eligible applicant". On 24 June 1996, the solicitors for the QBSA received a letter from the ASC seeking written advice as to:

" . why the QBSA cannot utilise the examination procedures contained within the QBSA Act in the present circumstances; and

. what advice your client has received from the liquidator concerning any proposal to examine the officers of Fairbrother."

The ASC also sought confirmation as to whether the QBSA was a creditor of Fairbrother.

The response of the solicitors for the QBSA of 26 June 1996 is important, because it seems to me to indicate that the fundamental reason for this present application is the absence of any useful examination provisions in the Act. The letter said in part:

" you have asked us why the Queensland Building Services Authority cannot utilise the `examination provisions' contained within the Queensland Building Services Authority Act (`the QBSA Act'). This is not a `domestic building dispute' and the powers under section 95(1) of the QBSA Act are not available. There are no examination provisions in the QBSA Act. The Authority intends in the future, if sufficient evidence becomes available, to institute disciplinary proceedings under section 101 of the QBSA Act but at this stage has insufficient information to do so;"

The letter referred to an offer by the QBSA to fund any public examination to be conducted by the liquidator subject to certain requirements such as the priority repayment of that funding and the use of a legal firm on the panel of solicitors retained by the QBSA. The letter said that that offer was rejected by the liquidator. It continued:

" Our client's concern with this proposal is two fold, firstly, as will be seen from delays thus far, is doubtful whether sufficient funds will be provided by the creditors to fund such an examination and, in the interim, assets of the company which are, apparently, in the liquidator's view, available in the administration for the benefit of creditors, are being dissipated. Secondly, the examination proposed by the liquidator is of a limited nature and will only go to proposed prioritised actions which have the greatest degree of success. In the first instance, this appears to relate only to payments made to a Mr Kelly as detailed in point 3 of page 2 of our letter dated 3 June 1996. Our client is of the view that it is in the best interests of all of the creditors that a full and proper public examination take place so that details of all assets available and all available actions both criminal and civil are identified;"

The letter said:

"We confirm that the Authority is a creditor of Fairbrother having paid substantial sums out under the insurance provisions of the QBSA Act to homeowners who suffered loss as a result of the company going into liquidation."

The letter was quite candid as to the purposes of the QBSA in seeking written authorisation to be an eligible applicant. The letter stated:

" ...it is our client's intention, in seeking your authorisation in writing, to conduct a public examination for the dual objectives of identifying and locating all assets available for creditors and to investigate and prosecute breaches of the Corporations Law and the QBSA Act."

Later, on behalf of the QBSA it was said:

" Our client is less than fully informed about the affairs of the company and seeks to use the procedures of an examination for the purpose of adding to its information. The purpose for which it intends to conduct examinations is to obtain information which will assist in identifying assets available for all creditors and in prosecuting disciplinary proceedings against those who have breached the QBSA Act - in those circumstances, our clients, in our respectful opinion, are no different from the Trustees whose authorisation from the Commission was upheld by the New South Wales Court of Appeal in Hong Kong Bank of Australia Limited & Ors v Murphy & Ors [1991] HCA 58; (1992) 10 ACLC 1, 573;"

By letter of 24 July 1996, the ASC by Mr Anthony Stumm, the Regional General Counsel of the ASC, advised:

" I have read your letters to the ASC (dated 3 and 26 June 1996) and have considered the arguments which are advanced therein in support of your client's application. I am not, however, satisfied that the QBSA should be so authorised and have accordingly determined to refuse your client's application."

By letter dated 9 August 1996, Mr Stumm gave reasons for his decision. In those reasons, under the heading "Relevant Law" he stated:

"4.1 In making my decision I adopted the reasoning expressed by their Honours, Gummow, Hill and Cooper JJ in Worthley v England (1994) 12 ACLC 775 at 785 (which related to the interpretation of the predecessor to the current provisions) that the criteria required for the exercise of the discretion by the ASC `are to be determined by implication from the subject matter, scope and purpose of the Act'.

4.2 I determined that such criteria require the applicant to:

4.2.1 have a significant nexus with the external administration of the company;

4.2.2 be the most suitable person in the circumstances to conduct the proposed examinations; and

4.2.3 have the predominant purpose of using the proposed examinations to obtain information for the general benefit of the company's contributories and creditors."

Under the heading "Reasons for Decision" Mr Stumm said:

" 5.1 In making my decision, I determined that:

5.1.1 the QBSA had no significant nexus with the external administration of Fairbrother;

5.1.2 the liquidator of Fairbrother was the person most suitable to conduct the proposed examinations, not the QBSA; and

5.1.3 the predominant purpose of the proposed examinations by the QBSA was to collect evidence to be used in disciplinary proceedings under the QBSA Act and not to obtain information for the general benefit of the company's contributories and creditors."

The evidence shows that the QBSA has paid a total of $50,259.70 by way of insurance payments to homeowners and there are a further seven homeowners who have claims which are being processed.

Michael Chesterman, the Manager of the Compliance Division of the QBSA, refers to many suspicious transactions in the company dealings and possible recovery actions which should be investigated. He deposes that:

" It is further obvious that the liquidator believes a public examination should be carried out."

He refers to the fact that the company was placed in provisional liquidation on 6 November 1995 and expresses concern that the effluxion of time might prejudice future actions either civil or criminal. He deposes further:

" In particular, the Applicant wishes to gather evidence which may well found disciplinary proceedings under section 101 of the Queensland Building Services Act but at this stage has insufficient information to do so. There are also time limits on such proceedings being instituted in the Queensland Building Tribunal."

Significantly, he says that if the applicant is authorised to carry out a public examination of the company's examinable affairs:

" ...in addition to gathering evidence with respect to breaches of the Queensland Building Services Act which the Applicant believes is in the public interest, the Applicant will also seek evidence to assist the liquidator in bringing recovery actions which actions ultimately if successful will be a positive benefit for the general body of creditors."

On 30 August 1996, the liquidator sent a circular to creditors, in which he reported obtaining judgment against a Mr John Kelly for $104,096.00. The letter referred to proceedings initiated against Coreyson Pty Ltd concerning claimed insolvent trading transactions totalling approximately $1.2m and further advised that eighteen creditors have provided funding thus far totalling $22,908.56. He noted that a number of creditors had indicated their willingness to fund but had not as yet provided those funds.

The objects of the QBSA are defined by s 3 of the Act, which provides:

" The objects of this Act are -

(a) to regulate the building industry -

(i) to ensure the maintenance of proper standards in the industry; and

(ii) to achieve a reasonable balance between the interests of building contractors and consumers; and

(b) to provide remedies for defective building work; and

(c) to provide for the efficient resolution of building disputes; and

(d) to provide support, education and advice for those who undertake building work and consumers."

The Act provides for a licensing regime by the QBSA. Section 31(2) provides:

" A company is entitled to a contractor's licence if the Authority is satisfied, on application by that company for a licence, that -

(a) the directors and any other persons who are in a position to control or substantially influence the conduct of the company's affairs (including, for example, shareholders with a significant shareholding, financiers and senior employees) are fit and proper persons to exercise such control or influence over a company that holds a contractor's licence; and

(b) the company's nominated supervisor holds a licence authorising the supervision of building work of the class or classes for which the licence is sought by the company; and

(c) the applicant satisfies the financial requirements imposed by regulation.

Part 5 of the Act erects a statutory insurance scheme and s 71(1) of the Act provides:

"If the QBSA makes a payment on a claim under the insurance scheme, the QBSA may recover the amount of the payment as a debt, from the building contractor by whom the relevant residential construction work was carried out."

The insurance scheme and the circumstances in which the QBSA becomes a creditor of a builder is confined to "residential construction work".

Part 7 of the Act establishes the Queensland Building Tribunal (`the QBT'). It has the power to adjudicate domestic building disputes, to review certain decisions by the QBSA in relation to licensing, or rectification, or other decisions of the QBSA which adversely affect a person (see sections 95 and 98). The QBT also has the power to take disciplinary proceedings against a licensee on application by either the QBSA or the Commissioner for Consumer Affairs and it can impose fines of up to $10,000.00 in the case of a natural person and $20,000.00 in the case of a corporation: s 101.

There can be no argument that the matters referred to by the QBSA are matters of significant public interest and that the concerns referred to by the QBSA are serious. The question in the present application however, is whether the decision of the ASC, in declining the application of the QBSA to be authorised as an "eligible applicant", is tainted with legal error.

The submission on behalf of QBSA is that it does fall within the class of persons entitled to written authorisation under the Law to be classed as an "eligible applicant", and a decision to refuse such application is unreasonable and contrary to law. While the particulars of the grounds for the application for review do not distinctly appear in any of the written material, it was contended on behalf of the QBSA that two legal errors infected the decision of the ASC: first, that the decision was so unreasonable that no reasonable decision-maker could have made it (see s 5(1)(e) and s 5(2)(g) of the Administrative Decisions (Judicial Review) Act 1977, (`the ADJR Act')); and secondly, that the decision-maker, in deciding as he did, applied the wrong test: see s 5(1)(d) and s 5(1)(f) of the ADJR Act.

I accept that there is no statutory justification in the terms of s 596A or 596B to restrict access to examination orders to persons in a position similar to that of a liquidator. There was no contention to the contrary on behalf of the ASC. In Whelan v Australian Securities Commission (No.1) (1993) 58 FCR 333, an authorisation was granted under the former s 597(1) to a privately appointed receiver and manager. In Hong Kong Bank of Australia Ltd v Murphy (1992) 10 ACLC 1573, the trustees of a unit trust were similarly authorised.

In Re Excel, Worthley v England (1994) 52 FCR 69, the Full Court of the Federal Court (Gummow, Hill and Cooper JJ) said at 82:

" The point of immediate significance is that it is for the Commission to make an administrative decision whether or not to authorise a person to apply to the Court under s 597(2).

Once an authorisation has been made, to which s 597(1) refers, the second stage of the procedure is an application by the authorised person (referred to in s 597(2) as a prescribed person) to the Court for an order for examination under s 597(3). The result of the application to the Court is a decision whether or not to order an intended examinee to attend to be examined. Different matters will arise for consideration at each stage of this two stage process. The question at issue in the first stage would be whether the prospective application seeking authorisation is an appropriate person for the Commission to authorise to make the application to the Court. That question will require consideration of the relationship which that person has to the corporation in relation to which application to the Court will be made, although it may also encompass matters personal to that applicant, such as the applicant's relationship to the persons to be examined."

Later at 83, the Court said:

" What subs (1) does, in its reference to authorisation, is permit the Commission to extend the class of persons who may, in a particular case, have standing through the grant of the Commission of authorisation. The Commission, in determining whether to grant authorisation, will consider the relationship which the person seeking authorisation has to the relevant corporation and the external management of that corporation which is in progress. Contributories and creditors would normally have the appropriate connection with the corporation (as the history of examination orders, already set out, demonstrates), although other factors relevant to a particular case may make the authorisation of such persons inappropriate. A receiver and manager might, as is conceded by the appellant also in an appropriate case, be authorised, that is to say given standing to apply to the Court under subs (2) for an order or orders under subs (3)."

The Court at 86 referred to the fact that the grant of authorisation does no more than confer standing upon the person authorised to make an application. The Court said:

" That being the case, reference to the subject matter, scope and purpose of subs (1) leads to the conclusion that the decision-maker, in determining whether to authorise a particular person to make applications in relation to a particular corporation, will be required only to consider the relationship which that person has to the external administration and in a particular case the appropriateness of that person being given standing to apply to the Court under subs (2).

It was properly conceded by counsel for the appellant that there could be no objection, at least in an appropriate case, for a receiver to be authorised to make application to the Court under subs (2). It is true that a receiver owes a primary duty to the debenture holders through the Trustee by whom he or she has been appointed (cf Re B Johnson & Co (Builders) Ltd [1955] Ch 634 at 661 per Jenkins LJ; approved by the Privy Council in Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295 at 313-314). This points up the fact that the receiver is acting for a creditor and it is undeniable that a creditor, in an appropriate case, would be a proper person to obtain approval. A creditor has an interest in ascertaining the assets of the company and their location, as well as to ensure that if assets have been misapplied they may be recovered for the benefit of the corporation."

There is therefore no doubt that the QBSA is within the class of persons which the ASC might authorise in writing to be an "eligible applicant". However, I have already noted the comment of the Full Court at 84 that "other factors relevant to a particular case may make the authorisation of such persons inappropriate". The Court further noted at 87:

" In an appropriate case the material before the decision-maker on behalf of the Commission may indicate that a person seeking authorisation is in a difficult conflict situation. For example, a creditor, perhaps related to officers of the company to the knowledge of the decision-maker, may seek authorisation to conduct an examination to forestall some other examination which may be in contemplation. If facts such as those were known to the decision- maker, it might be necessary to take them into account."

It is incumbent on a Court not to read the reasons for a decision of an administrative decision-maker in any super-critical way.

The Full Federal Court (constituted by Neaves, French and Cooper JJ) in Collector of Customs v Pozzolanic Enterprises Pty Ltd [1993] FCA 456; (1993) 43 FCR 280, said, at 287,

"[the] reasons for the decision under review are not to be construed minutely and finely with an eye keenly attuned to the perception of error."

There is some metaphoric confusion in this observation between the visual and the aural, but the message is clear.

This passage was approved by a majority of the High Court in the joint judgement of Brennan CJ, Toohey, McHugh and Gummow JJ in Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259. Their Honours continued (at 272):

"These propositions are well settled. They recognise the reality that the reasons of an administrative decision-maker are meant to inform and [are] not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed. In the present context, any court reviewing a decision upon refugee status must beware of turning a review of the reasons of the decision-maker upon proper principles into a reconsideration of the merits of the decision."

In my view, it is overstating the position to require an applicant seeking written authorisation to show that it is "the most suitable person in the circumstances to conduct the proposed examinations". However, a fair reading of the reasons by the decision-maker leads to the conclusion that, in the view of the decision-maker, authorisation should be denied to the QBSA because in the circumstances, the liquidator of Fairbrother Construction was the person most suitable to conduct the proposed examinations, not the QBSA. Clearly the holding of public examinations is desirable. As the history of the matter shows, it was and is the intention of the liquidator to conduct public examinations and I infer that it was the view of the decision-maker that duplicate examinations were neither efficient nor fair.

There is also the further consideration that, in the view of the decision-maker, the predominant purpose of the QBSA in conducting the public examination was to collect evidence to be used in disciplinary proceedings under the Act. That view was open to him. The conclusion that the predominant purpose of the QBSA in seeking authorisation was not to obtain information for the general benefit of the company's contributors and creditors was also fairly open to the decision-maker. That conclusion was a major reason for declining authorisation.

In Hamilton v Oades [1989] HCA 21; (1988) 166 CLR 486, Mason CJ considered the function and purpose of s 541 of the Companies (New South Wales) Code which provided for a public examination upon application by a "prescribed person". Section 541(1) provided that a "prescribed person" included:

"... any other person authorized by the Commission to make applications under this section ...."

Section 541(2) provided:

Where it appears to the Commission or to a prescribed person that -

(a) a person who has taken part or been concerned in the promotion, formation, management, administration or winding up of, or has otherwise taken part or been concerned in affairs of, a corporation has been, or may have been, guilty of fraud, negligence, default, breach of trust, breach of duty or other misconduct in relation to that corporation; or

(b) a person may be capable of giving information in relation to the promotion, formation, management, administration or winding up of, or otherwise in relation to affairs of, a corporation,

the Commission or prescribed person may apply to the Court for an order under this section in relation to the person."

His Honour said at 496-497:

" There are two important public purposes that the examination is designed to serve. One is to enable the liquidator to gather information which will assist him in the winding up; that involves protecting the interests of creditors. The other is to enable evidence and information to be obtained to support the bringing of criminal charges in connexion with the company's affairs. ...The examination is designed to elicit, among other things, evidence and information relating to the question whether the witness `has been, or may have been, guilty of fraud, negligence, default, breach of trust, breach of duty or other misconduct in relation to the corporation."

The statutory purposes referred to in Hamilton (supra) are wider and are not therefore, in my opinion, co-extensive with the purposes in Chapter 5 of the Law, understood by reference to the definition of "examinable affairs" in s 9 of the Law and to s 53 of the Law.

No doubt many statutory authorities, both Commonwealth and State, would love the power of public examination in aid of their statutory objects. No doubt those objects, in general, would be matters of public interest and concern. Yet in my opinion, those considerations do not require those authorities, if otherwise within the class of potential "eligible applicants," to be granted authorisation. Sections 596A and 596B of the Law confer a discretion on the ASC, the exercise of which can legitimately have regard to the duplication, expense, the purpose or purposes of persons seeking authorisation and the possible oppression to those sought to be the subject of examination.

In Worthley (supra), the Full Court, having referred to the observations of Mason CJ in Hamilton, (supra) said at 86:

"...the examination under consideration was an examination by a liquidator. In the present case the second of the public purposes, to which Mason CJ referred, has no application.

...

The purpose of an examination, in a case such as the present, is to gather information in relation to, inter alia, the management administration or otherwise the affairs of the corporation to determine the assets of the corporation which may be available for distribution to creditors and the location of those assets and, more particularly, to determine whether assets may be recovered by the corporation for the benefit of creditors, arising out of transactions which may have involved fraud, negligence, default, breach of trust, breach of duty or other misconduct in relation to the corporation."

The focus is not on fraud, negligence, default, breach of trust, breach of duty or other misconduct in relation to the corporation per se, but on transactions which might have involved those elements, and from which transactions assets might be recovered by the corporation for the benefit of creditors.

The public interest in rooting out from the building industry by way of disciplinary proceedings, those unfit to hold or be connected with a building licence is accepted. One can sympathise with the QBSA in its complaint that it lacks power under the QBSA Act to obtain information relevant to those matters.

To seek authorisation from the ASC to use the powers of public examination conferred for the purpose of the external administration of corporations under Chapter 5 of the Law is not the remedy for this deficiency. The remedy, if it thought fit so to do, is for the Queensland Parliament to confer those appropriate powers on the QBSA.

I am not persuaded that any legal error infected the decision of which review is sought.

The application is dismissed. I will hear the party on costs.

I certify that this and the preceding twenty-one (21) pages are a true copy of the reasons for judgment herein of the Honourable Justice Spender.

Associate

Date: 28 February 1997

Counsel for the applicant : Mr R Douglas QC with him Mr P Matthews

instructed by : Barwicks

Counsel for the respondent : Mr Applegarth

instructed by : Australian Securities Commission

Date of hearing : 3 February 1997