Albarran v The Members of the Companies Auditors & Liquidators Disciplinary Board [2006] FCAFC 69 (19 May 2006)

FEDERAL COURT OF AUSTRALIA

Albarran v The Members of the Companies Auditors & Liquidators Disciplinary Board [2006] FCAFC 69

RICHARD ALBARRAN v THE MEMBERS OF THE COMPANIES AUDITORS & LIQUIDATORS DISCIPLINARY BOARD AND ANOR
NSD 1916 of 2005

VANDA RUSSELL GOULD v DONALD MAGAREY AND ORS
NSD 2184 of 2005

EMMETT, ALLSOP & GRAHAM JJ
19 MAY 2006 (Corrigendum 23 May 2006)
SYDNEY

BETWEEN:	RICHARD ALBARRAN Applicant
AND:	THE MEMBERS OF THE COMPANIES AUDITORS & LIQUIDATORS DISCIPLINARY BOARD First Respondent AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION Second Respondent

BETWEEN:	VANDA RUSSELL GOULD Applicant
AND:	DONALD MAGAREY, DAVID OLIFANT and PATRICK PONTING being the members constituting the COMPANIES AUDITORS & LIQUIDATORS DISCIPLINARY BOARD First Respondent AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION Second Respondent
JUDGES:	EMMETT, ALLSOP & GRAHAM JJ
DATE:	19 MAY 2006 (Corrigendum 23 May 2006)
PLACE:	SYDNEY

6 In [39] on the second line, after "s 71" delete the comma and insert "of the Constitution,".

I certify that the preceding seven (7) numbered paragraphs are a true copy of the corrigendum to the Reasons for Judgment of the Honourable Justices Emmett, Allsop and Graham.

FEDERAL COURT OF AUSTRALIA

Albarran v The Members of the Companies Auditors & Liquidators Disciplinary Board [2006] FCAFC 69

CONSTITUTIONAL LAW – separation of judicial power – Companies Auditors & Liquidators Disciplinary Board – exercise of power to cancel or suspend registration of liquidators

Held: power of Companies Auditors and Liquidators Disciplinary Board under the s1292 of the Corporations Act to cancel or suspend registration of a liquidator does not involve the exercise of the judicial power of Commonwealth

Australian Constitution chapter III
Australian Securities and Investments Commission Act 2001 (Cth) Div 1 of Part 11, Div 2 of Part 11, s 210A(1), s220
Corporations Act 2001 (Cth) ss 1292, 1294, 1296, 1297 and 1298

Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; (1995) 183 CLR 245 referred to
British Imperial Oil Co Ltd v Federal Commissioner of Taxation [1926] HCA 58; (1926) 38 CLR 153 referred to
Cominos v Cominos [1972] HCA 54; (1972) 127 CLR 588 referred to
Farbenfabriken Bayer Aktiengesellschaft v Bayer Pharma Pty Ltd [1959] HCA 32; (1959) 101 CLR 652 referred to
HA Bachrach Pty Ltd v Queensland [1998] HCA 54; (1998) 195 CLR 547 referred to
Luton v Lessels [2002] HCA 13; (2002) 210 CLR 333 referred to
Pasini v United Mexican States [2002] HCA 3; (2002) 209 CLR 246 referred to
Precision Data Holdings Ltd v Wills [1991] HCA 58; (1991) 173 CLR 167 referred to
R v Hegarty; Ex parte City of Salisbury [1981] HCA 51; (1981) 147 CLR 617 referred to
R v Quinn; Ex parte Consolidated Foods Corporation [1977] HCA 62; (1977) 138 CLR 1 referred to
R v Spicer; Ex parte Australian Builders’ Labourers’ Federation [1957] HCA 81; (1957) 100 CLR 277 referred to
Re Dingjian; Ex parte Wagner [1995] HCA 16; (1995) 183 CLR 323 referred to
Re Ranger Uranium Mines [1987] HCA 63; (1987) 163 CLR 656 referred to
Rich v Australian Securities & Investments Commission [2004] HCA 42; (2004) 220 CLR 129 referred to

Sue v Hill [1999] HCA 30; (1999) 199 CLR 462 referred to

RICHARD ALBARRAN v THE MEMBERS OF THE COMPANIES AUDITORS & LIQUIDATORS DISCIPLINARY BOARD AND ANOR
NSD 1916 of 2005

VANDA RUSSELL GOULD v DONALD MAGAREY AND ORS
NSD 2184 of 2005

EMMETT, ALLSOP & GRAHAM JJ
19 MAY 2006
SYDNEY

BETWEEN:	RICHARD ALBARRAN Applicant
AND:	THE MEMBERS OF THE COMPANIES AUDITORS & LIQUIDATORS DISCIPLINARY BOARD First Respondent AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION Second Respondent

BETWEEN:	VANDA RUSSELL GOULD Applicant
AND:	DONALD MAGAREY, DAVID OLIFANT and PATRICK PONTING being the members constituting The COMPANIES AUDITORS & LIQUIDATORS DISCIPLINARY BOARD First respondent AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION Second Respondent
JUDGES:	EMMETT, ALLSOP & GRAHAM JJ
DATE OF ORDER:	19 MAY 2006
WHERE MADE:	SYDNEY

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

BETWEEN:	RICHARD ALBARRAN Applicant
AND:	THE MEMBERS OF THE COMPANIES AUDITORS & LIQUIDATORS DISCIPLINARY BOARD First Respondent AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION Second Respondent

BETWEEN:	VANDA RUSSELL GOULD Applicant
AND:	DONALD MAGAREY, DAVID OLIFANT and PATRICK PONTING being the members constituting the COMPANIES AUDITORS & LIQUIDATORS DISCIPLINARY BOARD First Respondent AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION Second Respondent
JUDGES:	EMMETT, ALLSOP & GRAHAM JJ
DATE:	19 MAY 2006
PLACE:	SYDNEY

1. These two proceedings raise questions as to whether the exercise of certain powers conferred on the first respondent, members of the Companies Auditors and Liquidators Disciplinary Board (‘the Board’), by s 1292 of the Corporations Act 2001 (Cth) (‘the Corporations Act’) to cancel or suspend the registration of company liquidators involves the exercise of judicial power. If so, the conferring of the power and its exercise by the Board is an ineffective attempt by the Commonwealth Parliament to confer the judicial power of the Commonwealth upon a body which is not a court and whose members are not judges as contemplated by chapter III of the Australian Constitution.

2. The matters have been heard together, because they raise the same question. However, they are otherwise unconnected and it is desirable to set out the background to each proceeding separately.

3. Mr Vanda Russell Gould has been registered as a liquidator under the Corporations Act and its predecessors since 7 January 1983. On 15 July 2001, the second respondent, Australian Securities and Investments Commission (‘the Commission’), applied to the Board for orders that Mr Gould’s registration be suspended.

4. On 26 August 2004, the Board published reasons for its findings that Mr Gould had failed in a number of respects to carry out or perform adequately and properly certain of his duties or functions as a liquidator. On 21 December 2004, the Board ordered that the registration of Mr Gould as a liquidator be suspended for a period of three months. The Board also required Mr Gould to give undertakings that, before accepting any appointment after the period of three months suspension, he would provide to the Commission a certificate by a registered liquidator that Mr Gould’s internal systems and procedures for conducting insolvency administrations were of an acceptable standard.

5. On 17 June 2005, Mr Gould commenced a proceeding in the High Court of Australia (‘the Gould Proceeding’). In the Gould Proceeding, Mr Gould claimed an order prohibiting the Board and the Commission from further proceeding or taking any further steps pursuant to the order of the Board made on 21 December 2004 or the determination made on 26 August 2004. Mr Gould also claimed an order quashing the Board’s order of 21 December 2004 and an injunction restraining the Board and the Commission from acting on the order of 21 December 2004 or the determination made on 26 August 2004. Finally, Mr Gould claimed a declaration that each of ss 1292, 1294, 1296, 1297 and 1298 of the Corporations Act and Division 2 of Part 11 of the Australian Securities and Investments Commission Act 2001 (Cth) (‘the ASIC Act’) was not a valid law of the Commonwealth.

6. On 15 August 2005, the proceeding was remitted to the Federal Court of Australia to continue there as if the steps already taken in the High Court had been taken in the Federal Court.

7. Mr Richard Albarran has been registered as a liquidator under the Corporations Act and its predecessor since 19 August 1999. On 6 January 2005, the Commission applied to the Board for orders that Mr Gould’s registration be cancelled on the ground that Mr Albarran had failed to carry out or perform adequately and properly certain of his duties or functions as a liquidator. The Board fixed the application for hearing on 29 August 2005.

8. However, on 20 July 2005, Mr Albarran commenced a proceeding in the High Court of Australia (‘the Albarran Proceeding’). In the Albarran Proceeding, Mr Albarran claimed an order prohibiting the Board from taking any further steps in the proceeding brought by the Commission against Mr Albarran. The ground identified upon which the relief was sought was that s 1292 impermissibly invests the members of the Board with the judicial power of the Commonwealth. An application to the High Court for a stay of the proceedings before the Board was dismissed by the Court on 15 August 2005 and the summons was remitted to the Federal Court with the proceeding to continue in the Federal Court as if the steps already taken in the High Court had been taken in the Federal Court. Thereupon, the Board proceeded to hear the Commission’s application for cancellation of Mr Albarran’s registration. On 23 December 2005, the Board determined that it was satisfied that Mr Albarran had failed within the meaning of s 129(2)(d)(ii) of the Corporations Act to carry out or perform adequately and properly the duties or functions required by an Australian law to be carried out or performed by a registered liquidator. On 6 March 2006 the Board heard submissions on the orders which it should, in the circumstances make.

9. The Chief Justice has directed that the Gould Proceeding and the Albarran Proceeding both be dealt with by a court consisting of three judges.

10. Mr Gould and Mr Albarran were separately represented. Each adopted submissions made on the other’s behalf, though there were some differences of approach. The Board submitted in both proceedings to such order as the Court considers appropriate, save for any order as to costs. The Commission was represented by senior counsel and the Attorney-General of the Commonwealth intervened after notice of a Constitutional matter had been given in each proceeding pursuant to s 78B of the Judiciary Act 1903 (Cth).

11. The Constitutional question was formulated as follows in the Gould Proceeding:

12. The Constitutional question was formulated as follows in the Albarran Proceeding:

13. The arguments as to the validity of s 1292 are determinative of both applications.

14. Division 1 of Part 11 of the ASIC Act provides for the constitution of the Board. The Board consists of:

15. Under s 210A(1) of the ASIC Act, the Board’s functions and powers in relation to an application for a person to be dealt with under s 1292 of the Corporations Act are to be performed and exercised by a panel of the Board constituted under s 210A(2). By s 210A(2) the Chairperson of the Board is to determine the members of the Board who are to constitute the panel that is to hear the matter. Under s 210A(4) the panel is to be constituted, relevantly, as a three person panel consisting of:

16. Division 2 of Part 11 of the ASIC Act deals with hearings by the Board. Under s 216(1), which is in Division 2, a panel constituted to hear a matter may hold a hearing for the purpose of performing or exercising the Board’s functions or powers in relation to that matter. Section 217 authorises the panel to summons a person to appear at a hearing to give evidence and to produce documents. Under s 218(1), the proceedings at a hearing must be conducted with as little formality and technicality, and with as much expedition, as the requirements of the Corporations Act and the ASIC Act and a proper consideration of the matters before the panel permit. The panel is not bound by the laws of evidence and may permit a person to intervene in the proceeding on such conditions as it thinks fit. Under s 218(2) the panel must observe the rules of natural justice at and in connection with the hearing.

17. Section 220 of the ASIC Act prohibits a person from engaging in conduct that results in the obstructing or hindering of a panel in the performance or exercise of any of the Board’s functions or powers. Under s 221(1) the members of a panel in the performance of their functions or the exercise of their powers in relation to a hearing have the same protection and immunity as a Justice of the High Court. Similar protection and immunity is conferred upon barristers, solicitors and other persons appearing on behalf of a person at a hearing. Under s 222 a hearing is, for the purpose of Part III of the Crimes Act 1914 (Cth) taken to be a judicial proceeding. Under s 223, the panel may require a person to pay costs of and incidental to the hearing.

18. The Corporations Act provides for the appointment of liquidators of companies being wound up. Thus, under s 459A and s 459B, the Court may order that a company be wound up in insolvency. Under s 461, the Court may order the winding up of a company on various grounds. Under s 472(1), on an order being made for the winding up of a company, the Court may appoint an official liquidator to be a liquidator of the Company. Under s 472(2) the Court may appoint an official liquidator provisionally at any time after the filing of a winding up application and before the making of a winding up order.

19. Section 1283 provides for the registration by ASIC of a natural person who is a registered liquidator as an official liquidator. Under s 1283(2), a person who is registered as an official liquidator is entitled, upon request, to be issued with a certificate of his or her registration.

20. Under s 491(1) of the Corporations Act, a company may be wound up voluntarily if the company so resolves by special resolution (unless an application for the company to be wound up insolvency has already been filed or the Court has ordered that the company be wound up in insolvency). Under s 495, the company must appoint a liquidator or liquidators for the purpose of winding up the affairs and distributing the property of the company. Under s 497(1), in a creditors’ voluntary winding up, the company must cause a meeting of the creditors of the company to be convened. Under s 499, the company must, and the creditors may, at their respective meetings, nominate a person to be the liquidator for the purpose of winding up the affairs and distributing the property of the company. Provision is made for settling a nomination where different persons are nominated.

21. Under s 532(1) of the Corporations Act, a person must not consent to be appointed, and must not act, as liquidator of a company unless he or she is a registered liquidator or, in the case of a specified body corporate, is registered as a liquidator of that company under s 1282(3). However, under s 532(4), s 532(1) does not apply to a members’ voluntary winding up of a proprietary company.

22. Part 9.2 of the Corporations Act deals with the registration of auditors and liquidators. Section 1279(1)(b) provides that a natural person may make an application to the Commission for registration as a liquidator. Such an application must be lodged with the Commission and must contain such information as is prescribed. Section 1282(2) provides that, where an application for registration as a liquidator is made under s 1279, the Commission must grant the application if:

23. Section 1282(6) provides for the Commission to issue a certificate to a person whose application for registration as a liquidator is granted. The certificate is to state that the person has been registered as a liquidator and specifies a day as the day of the beginning of the registration. Under s 1282(8) the registration of a person as a liquidator under s 1282(2) comes into force at the beginning of the day specified in the certificate and remains in force until the registration is cancelled by the Commission or the Board or the person dies.

24. Division 3 of Part 9.2 is concerned with cancellation or suspension of registration of auditors and liquidators. The critical provision for the purpose of these proceedings is s 1292(2), which is in Division 3. Section 1292(2) purports to confer on the Board the power to cancel or suspend the registration of a person as a liquidator and provides as follows:

The syntax of s 1292(2) is awry. There are no paragraphs (b) or (c), those paragraphs having been repealed. Further, paragraph (d) commences with an otiose ‘that’. However, nothing seems to turn on the syntax.

25. Section 1292(9) provides alternative and additional disciplinary sanctions. Under that provision, where, on an application by the Commission for a person who is registered as an auditor, liquidator or liquidator of a specified body corporate to be dealt with under s 1292, the Board is satisfied that the person has failed to carry out or perform adequately and properly any of the duties or functions mentioned in, relevantly, s 1292(2)(d), or is otherwise not a fit and proper person to remain registered, the Board may deal with the person in one or more of the following ways:

If a person fails to give such an undertaking when required to do so or contravenes an undertaking given, the Board may cancel or suspend the registration of the person. The powers under s 1292(9) may be exercised in addition to, or in substitution for, the exercise of the Board’s powers to cancel or suspend a registration under the other provisions of s 1292. Section 1294 provides for the Board to give procedural fairness to the person by provision of an opportunity to appear at a hearing held by, to make submissions to and to adduce evidence before the Board: s 1294(1); and, relevantly, the Commission must be given an opportunity to appear in circumstances where the Board is required to give the person such an opportunity: s1294(2). Under s 1296, the Board is obliged to set out its decisions in writing and to give reasons. Section 1297 deals with the coming into effect of the orders of the Board. Section 1298 deals with the effect of the suspension of registration.

26. Plainly, Part 9.2 of the Corporations Act is a statutory regime designed to limit those who are entitled to be, and hold themselves out as being, auditors and liquidators, to people who have the required professional skill and competence and who are otherwise fit and proper persons to occupy such positions. To call it a licensing regime is not to affix a label to the words of Parliament; rather, it is to describe, with tolerable accuracy, the nature of the provisions in language adequate to describe certain types of governmental power. Parliament has given to the Commission the task of attending to registration of auditors and liquidators. It has given to the Board the task of deciding whether a person who has registration as an auditor or liquidator should have his or her registration cancelled or suspended. The circumstances in which this may occur for a liquidator (see 1292(2)) reflect the underlying necessary qualities for registration: skill, competence and being otherwise a fit and proper person to hold the position. The position, it is to be recalled, is one of some responsibility in the commercial community and in corporate life and administration, involving not only the requirements of probity and skill in dealing with commercial affairs, but also in dealings with courts whose work may encompass the affairs of companies.

27. In these circumstances, it is unsurprising that Parliament would place (not necessarily exclusively) the task provided for in s 1292 in the hands of persons of the backgrounds provided for in Division 1 of Part 11 of the ASIC Act.

28. The origins of the present regime for the registration of auditors and liquidators go back to the Uniform Companies Acts in 1961. For instance, by s 9(8) of the Companies Act 1961 (NSW) (the "1961 Act"):

29. The Board there referred to was the Companies Auditors Board, established under s 8 of the 1961 Act, whose functions included effecting and controlling the registration of company auditors and liquidators. By s 8(2) the Public Accountants Registration Board of New South Wales became the Companies Auditors Board.

30. Section 9 of the 1961 Act empowered the Board, amongst other things, to inquire, in relation to a registered liquidator, into the "conduct and character as well as the abilities of the person", but not without giving the person an opportunity to be heard. The Board was given powers of requiring attendance and production of books. Section 9(12) provided as follows:

31. Various amendments were made up to 1981, which did not alter the basic structure of this statutory approach.

32. The relevant Companies Codes after 1981 divided responsibility for registration of auditors and liquidators between the National Companies and Securities Commission and the Companies Auditors and Liquidators Disciplinary Boards, the former being responsible for registration and the latter for determining whether registration should be cancelled or suspended: see ss 20 and 27 of the Companies Act 1981 (Cth) (the "1981 Act") (which applied as legislation of the Australian Capital Territory and which was adopted by the relevant State Acts each entitled Companies (Application of Laws) Act). Each State and Territory continued to provide for its own disciplinary board. In 1983, s 27 of the 1981 Act was replaced with ss 30A to 30S which sought to harmonise the powers of the respective boards.

33. The Corporations Law came into operation on 1 January 1991 following the passing of the Corporations Act 1989 (Cth). As part of the placement of the regulation of companies on a national footing, the various State and Territory disciplinary boards were replaced by one constituted under Part 11 of the Australian Securities Commission Act 1989 (Cth) (the "ASC Act"), and in particular see ss 202 and 203. Part 9.2 of the Corporations Law dealt with registration of auditors and liquidators in a manner and in terms similar to Part 9.2 of the Corporations Act.

34. Unlike the provisions contained in the Uniform Companies Acts and the State Companies Codes, the Corporations Law did not confer any power on the Board to impose fines or penalties, nor did its successor the Corporations Act.

35. A preliminary question was raised as to the construction of s 1292(2)(d)(ii), in contrast to s 1292(2)(d)(i). Clearly enough, a distinction is drawn between carrying out or performing the duties of a liquidator, on the one hand, and carrying out or performing duties or functions that may be carried out or performed only by a person who is a registered liquidator, on the other hand. For example, a person may be appointed as administrator of a company only if the person is a registered liquidator. Section 1292(2)(d)(ii) would apply to carrying out or performing duties or function in that capacity, whereas s 1292(2)(d)(i) would apply to carrying out or performing duties or functions as a liquidator. It is unnecessary to decide the precise relationship between paragraphs (i) and (ii) of s 1292(2)(d).

36. The grants of legislative power contained in s 51 of the Constitution do not permit the conferral of the judicial power of the Commonwealth upon any body or person except a court contemplated by Chapter III of the Constitution: R v Kirby; Ex parte Boilermakers Society of Australia [1956] HCA 10; (1956) 94 CLR 254 at 270. The Board is not such a body. Accordingly, Parliament cannot invest any part of the judicial power of the Commonwealth in the Board. The question is whether the relevant parts of the Corporations Act and the ASIC Act purport to invest judicial power of the Commonwealth in the Board. If that question is to be answered in the affirmative, as Messrs Gould and Albarran contend, it is necessary to characterise the process that takes place before the Board in exercising power under s 1292 of the Corporations Act in accordance with Division 2 of Part 11 of the ASIC Act, as the exercise of judicial power.

37. The Board is called upon to determine whether a person who is a registered liquidator has failed to carry out or perform certain duties or functions adequately and properly or is otherwise not a fit and proper person to remain registered as liquidator. Messrs Gould and Albarran say that, in conducting an enquiry to make a determination on the first alteration, the Board acts as a decision maker in the context of adversarial proceedings between the Commission and the registered liquidator, based on evidence and submissions led or made by the parties. The Board is required to identify the specific duties or functions that the registered liquidator was required to carry out or perform and make a judgment as to whether they were carried out or performed properly and adequately.

38. The enquiry as to whether a person has failed to carry out or perform adequately and properly relevant duties or functions is entirely retrospective. It is solely about whether the person has done something in the past. Before the Board cancels or suspends registration of, or deals with, a liquidator in any of the ways contemplated by s 1292(9), the Board must give the registered liquidator an opportunity to appear at a hearing and to make submissions and adduce evidence. The Board is also obliged to set out its decisions in writing and to give reasons. Those requirements are indicative of judicial process. Messrs Gould and Albarran would characterise the role of the Board as determining whether "past wrongdoing should be met with punishment in the form of cancellation or suspension or otherwise".

39. Powers of the nature presently under consideration fall into three categories:

Messrs Gould and Albarran say that the powers in question fall within the second category. The proceeding before the Board involves an attempt to deprive the liquidators of a public office and is, therefore, punitive. However, they accept that the fact that a proceeding is punitive does not necessarily mean that judicial power is engaged.

40. On the other hand, the fact that punitive proceedings are not criminal does not mean that they do not involve judicial power. The question is where, along a punitive continuum, particular forms of punishment lie. Messrs Gould and Albarran contend that, where the common law provides procedural safeguards in relation to the imposition of a punishment then it is more likely that the proceeding involves the exercise of judicial power. Mr Albarran says that following the decision of the High Court in Rich v Australian Securities & Investments Commission [2004] HCA 42; (2004) 220 CLR 129, it is clear that persons upon whom removal from office is urged are to receive the same kinds of procedural protection traditionally afforded in more formal proceedings. Unless the Board exercises judicial power it is unable to police the limits of the privileges that exist in such a proceeding.

41. Messrs Gould and Albarran say that, in exercising power under s 1292(2), the Board must exercise a judgment involving a legal standard in most cases. So far as s 1292(2)(d) is concerned, the standard is whether the registered liquidator has carried out or performed relevant duties or functions adequately or properly. That, they say, signifies the power conferred by s 1292(2)(d) entails the exercise of judicial power.

42. As we have already said, the regime described above can fairly be characterised as a licensing regime. That is not to usurp the relevant enquiry, but rather to describe the regime with tolerable accuracy. The registration of liquidators has, at its foundation, the requirement for requisite skill and probity: see s 1282. Section 1292 is directed to these same matters. Each section is enlivened by considerations of satisfaction and the issues on which satisfaction is required are entrusted to bodies with appropriate professional skills to make informed decisions. Section 1292(2)(d) directs an enquiry as to whether, amongst other things, duties have been adequately and properly carried out in the past. It is not expressed in terms of a general enquiry as to whether the person is fitted by skill and character to remain a liquidator. Nevertheless, an enquiry whether the person has in the past failed to perform or carry out his or her duties adequately and properly can be seen as a reasonable surrogate for an enquiry as to the fitness of the person, especially considering its place in s 1292(2) and all the terms of s 1292(2). The satisfaction of the Board that the liquidator has failed in his or her duties in the past enlivens the power of the Board to deal with the registration. In the exercise of such power, it will be a matter for the Board to take into account, in accordance with the structure, terms and purpose of the Corporations Act, such considerations as it considers to be relevant to that course of action. That the enquiry as to the past is seen as a guide to whether the person is fit and proper to remain registered as a liquidator can be seen by the phrase at the end of s 1292(2)(d):

43. The only consequence of the exercise of the power conferred by s 1292(2) is to cancel or suspend a statutory right that is itself conferred by the Corporations Act, or, to take a step contemplated by s 1292(9). The right embodied in registration is conferred subject to the power to cancel or suspend and is expressly stated to last until cancelled or suspended. The exercise of the power deprives a person of nothing that had not been conferred on that person by the grant of the voluntary application made by the person to be a registered liquidator.

44. The purpose or object of the enquiry undertaken by the Board, in exercising the power conferred by s 1292(2), is not the ascertainment or enforcement of any legal right, but the determination whether, in the view of the Board, taking into account past failures of duties, a defeasible right should continue into the future. No punishment is imposed by reason of any conclusion that duties or functions have not been carried out or performed adequately and properly. Rather, upon being satisfied of past failures of duty, the Board is empowered to deal with the continued existence of a statutory right. The only consequence of the making of an order under s 1292(2) is that the registration of the liquidator ceases, either permanently or for so long as a suspension may be in force. If a failure to carry out or perform duties or functions properly and adequately constitutes a contravention of the Corporations Act or of any other provision, that is not the matter, relevantly, for the Board to decide. Even if the Board were to conclude that there had been a failure to carry out and perform relevant duties and functions adequately and properly, and even if it be the fact that that failure constituted a contravention of the law, the punishment of that contravention would be a matter for an entirely different tribunal, namely, a court exercising an entirely different species of power, namely, judicial power.

45. The exercise of power under s 1292(2)(d) does not turn on the Board being satisfied as to a legal standard. It may be that the failure to carry out and perform a relevant duty or function is an offence. However, that is not what the Board is called upon to determine by the terms of s 1292. The question of the adequacy and propriety of the carrying out or performance is to be judged by the Board by making an evaluative or subjective determination. Having made that evaluative or subjective determination, the Board will consider whether the rights of the registered liquidator as to the future are to be changed by the exercise of the power under s 1292(2) in the light of all the considerations before it that are considered relevant.

46. The relevant tripartite taxonomy of governmental power: power appropriate to be exercised exclusively by the judicial branch, power appropriate to be exercised exclusively by the executive branch and power appropriate to be exercised by either the judicial or executive branch was illuminated by Isaacs J in British Imperial Oil Co Ltd v Federal Commissioner of Taxation [1926] HCA 58; (1926) 38 CLR 153 (the "Second BIO case"), esp at 174-81. Underpinning this division lie historical notions as to the appropriate distribution of governmental power in society and the need for the workable functioning of government in the broad sense. In relation to powers which may be exercised either by a court or by the executive, "the character of the function takes its colour largely from the primary character of the functionary, and depends also on how the decision is made binding and how enforced": the Second BIO case at 177. This is not just a matter of labelling. It concerns how power is exercised and with what aim and consequence, in order to understand what species of power is being exercised: Precision Data Holdings Ltd v Wills [1991] HCA 58; (1991) 173 CLR 167 at 189; Re Ranger Uranium Mines; Ex parte Federated Miscellaneous Workers’ Union of Australia [1987] HCA 63; (1987) 163 CLR 656 at 665-66; R v Hegarty; Ex parte City of Salisbury [1981] HCA 51; (1981) 147 CLR 617 at 628; and R v Spicer; Ex parte Australian Builders’ Labourers’ Federation [1957] HCA 81; (1957) 100 CLR 277 at 305. It is important in this enquiry to recognise that it relates to the nature of governmental power. It is not an enquiry limited to derivation of conclusions from a priori reasoning, though such analysis is, of course, an essential part of the process.

47. This "functional analysis" (for which expression see HA Bachrach Pty Ltd v Queensland [1998] HCA 54; (1998) 195 CLR 547 at 562) is deeply entrenched in Constitutional analysis in this field: see the above cases and see also Farbenfabriken Bayer Aktiengesellschaft v Bayer Pharma Pty Ltd [1959] HCA 32; (1959) 101 CLR 652; R v Quinn; Ex parte Consolidated Foods Corporation [1977] HCA 62; (1977) 138 CLR 1; Cominos v Cominos [1972] HCA 54; (1972) 127 CLR 588 at 606-607; Re Dingjian; Ex parte Wagner [1995] HCA 16; (1995) 183 CLR 323 at 360; Sue v Hill [1999] HCA 30; (1999) 199 CLR 462 at 481-82; and Pasini v United Mexican States [2002] HCA 3; (2002) 209 CLR 246 at [12].

48. If one takes the exercise of power here – that is to terminate or suspend a right or status, created by statute, by reference, in part, to past conduct – it can be readily accepted that a court might do this or an administrative tribunal might do this. This is not a power which is inherently judicial. The character of the Board, the undoubted bringing to bear by the Board of professional standards (with the knowledge of which its members can be taken to be imbued), an absence of an assigned task of deciding a controversy between parties as to the existence or not of present mutual rights and obligations of those parties upon the application of the law to past events, the exercise of an evaluative and discretionary power in the protection of the public as to whether a person is fit and proper to continue to hold a position of importance provided for by the statute, all combine to give the conclusion that the conferral on the Board of the power in s 1292 is not judicial.

49. It is simply wrong to conclude from Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; (1995) 183 CLR 245 or Rich v Australian Securities and Investments Commission that somehow the tasks of the Board are to decide upon existing rights and obligations by application of law to past events and to punish consequentially upon those findings. The consequence of the satisfaction of the Board that the person has failed to carry out or perform adequately or properly his or her duties in the past (which may or may not involve examination of, or conclusions as to, facts which, if found, would amount to an offence) is to enliven the power to take one of the steps provided for by s 1292(2) and (9). The exercise of that power might depend on other considerations considered by the Board beyond the question of past failure to perform duties. If steps are taken, they may alter or end an existing legal right for the future. If they do, that can be seen as no more than a change to the right, the potential for which change was immanent within the original grant of the right. The distinction between deciding whether a legal right created by the statute should exist in the future, and deciding what legal rights or obligations in fact exist is fundamental: Re Ranger Uranium at 665-66; Precision Data at 189; Brandy at 268; and Luton v Lessels [2002] HCA 13; (2002) 210 CLR 333 at [22] and [67].

50. The function of the Board is not, as was submitted, to find (as an exercise of deciding present rights and obligations in the above sense) whether an offence has been committed and, if so, to inflict a punishment therefor. It is, as we have said, to assess whether someone should continue to occupy a statutory position involving skill and probity, in circumstances where (not merely because) the Board is satisfied that the person has failed in the performance of his or her professional duties in the past. Messrs Gould and Albarran say that punishment or a penal or harmful consequence is finally inflicted on the person consequent upon the finding of the committal of an offence prescribed by law. That is not what s 1292(2) says the function of the Board is. It is not, in substance, what the Board does.

51. The procedural indicia set out in Part 9.2 division 3, taken individually or together, do not change the character of the power. In particular, the fact that an order is made or that costs can be awarded does not change the substance of the Board’s task set out above, and the formality of the hearing and the power to adduce evidence likewise are not incidents of power limited to courts.

52. The exercise of power under s 1292(2) by the Board does not involve the exercise of judicial power. Each of the proceedings must be dismissed with costs.

I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Emmett, Allsop & Graham.

Counsel for the Applicant:	Mr B W Walker SC with Mr P J Brereton

Solicitor for the Applicant:	Henry Davis York

Solicitor for the First Respondents:	Australian Government Solicitor

Counsel for the Second Respondent:	Mr S J Gageler SC with Mr A J Abadee

Solicitor for the Second Respondent:	Australian Securities and Investments Commission

Counsel for the Attorney-General Intervening:	Mr H Burmester QC with Ms K L Eastman

Solicitor for the Attorney-General Intervening:	Australian Government Solicitor

Counsel for the Applicant:	Mr N Perram with Mr B L Jones

Solicitor for the Applicant:	Nash O’Neill Tomko

Solicitor for the First Respondent:	Australian Government Solicitor

Counsel for the Second Respondent:	Mr S J Gageler SC with Mr A J Abadee

Solicitor for the Second Respondent:	Australian Securities and Investments Commission

Counsel for the Attorney-General Intervening:	Mr H Burmester QC with Ms K L Eastman

Solicitor for the Attorney-General Intervening:	Australian Government Solicitor

Date of Hearing:	21 March 2006

Date of Judgment:	19 May 2006

•	a Chairperson,
•	a Deputy Chairperson,
•	members nominated by Board of the Institute of Chartered Accountants in Australia and the Board of Directors of CPA Australia (‘Accounting Members’), and
•	members (‘Business Members’) who the Minister is satisfied are suitable for appointment as representatives of the business community because of their qualifications in, knowledge of or experience in one or more of the following fields:

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY

1.	The applications in proceedings NSD 1916 of 2005 and NSD 2184 of 2005 be dismissed.
2.	In each proceeding the applicant pay the costs of the respondents.

Federal Court of Australia - Full Court Decisions

Albarran v The Members of the Companies Auditors & Liquidators Disciplinary Board [2006] FCAFC 69 (19 May 2006)