Duncan and Companies Auditors and Liquidators Disciplinary Board and Australian Securities and Investments Commission (Joined Party) [2009] AATA 389 (29 May 2009)

Last Updated: 1 June 2009

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 389

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N 2006/1658

GENERAL ADMINISTRATIVE DIVISION

)

Re

ADRIAN DUNCAN

Applicant

And

COMPANIES AUDITORS AND LIQUIDATORS DISCIPLINARY BOARD

Respondent

And AUSTRALIAN SECURITIES AND

INVESTMENTS COMMISSION

Joined Party

DECISION

Tribunal

Mr P W Taylor, SC, Senior Member

Date 29 May 2009

Place Sydney

Decision

The Tribunal declines to direct any alteration to the terms of its 14 April 2009 decision.

.................[sgd]...........................
Mr P W Taylor, SC

Senior Member

CATCHWORDS

PRACTICE AND PROCEDURE – consent decision – request to amend consent decision – submitting appearance made by party seeking amendment – agreement not signed by submitting party – decision relating to a part of the proceeding or a matter arising out of the proceeding – whether Tribunal obliged to substitute a decision for a decision set aside – the Tribunal declines the request to amend the consent decision

Administrative Appeals Tribunal Act 1975 – sections 42C, 43, 43AA

Corporations Act 2001 – sections 1292, 1317B

REASONS FOR DECISION

29 May 2009

Mr P W Taylor, SC, Senior Member

1. On 14 April 2009 the Tribunal issued a decision giving effect to an agreement between the Applicant and the Australian Securities and Investments Commission (“ASIC”). The decision was expressed to be authorised by section 42C(1) of the Administrative Appeals Tribunal Act 1975. However, the written agreement was in fact signed only by the legal representatives of the Applicant and ASIC.
2. The Companies Auditors and Liquidators Disciplinary Board (“the Board”) made the decision under review and is the First Respondent to the review proceedings in the Tribunal. However, its role was essentially that of a submitting party. In fact, on 18 April 2008 the Australian Government Solicitor, who acted on behalf of the Board, wrote to the Tribunal advising “that the first respondent submits to any order of the Tribunal save as to costs”.
3. ASIC was joined as a party to the proceedings on 4 December 2006. This was done pursuant to a direction made under section 30(1A) of the Administrative Appeals Tribunal Act 1975. ASIC was, in fact, the active contesting party opposing the review application, and had been the applicant in the proceedings before the Board.
4. ASIC and Mr Duncan submitted their signed written agreement to the Tribunal under cover of ASIC’s letter of 14 April 2009. Unsurprisingly, neither the terms nor the covering letter bore any signature recording the Board’s consent. Indeed, the preamble to the signed terms recorded that it contained an agreement “reached between the Applicant and the Second Respondent”. The terms made no reference to the Board as a consenting party. Although a copy of the terms was sent to the Board prior to them being filed at the Tribunal, the Board says it did not receive the proposed terms.
5. The Tribunal’s 14 April 2009 decision was issued to each of the parties, including the Board, under cover of a letter dated 15 April 2009. The Tribunal’s letter explained that the decision gave effect to the agreement “reached by the parties”. The letter invited the parties to inform the Tribunal if they considered the decision did not correctly reflect the agreement reached. The purpose of this request was to permit correction, in accordance with the power conferred by section 43AA of the Administrative Appeals Tribunal Act 1975.
6. The Board responded to the Tribunal’s letter on 8 May 2009. In that letter the Board made the following points:

6.1 the Board was not a party to the agreement between ASIC and Mr Duncan and had not signed their written agreement;

6.2 the Board did not wish to alter the substance of the terms of the agreement between Mr Duncan and ASIC, but took the formal position of neither consenting to, nor opposing, orders giving effect to the agreement;

6.3 the Tribunal’s 14 April 2009 decision should be amended so as to delete any reference to the Board's determination dated 15 August 2006;

6.4 the Tribunal’s 14 April 2009 decision should be further amended, by deleting a direction that “the application for review is otherwise dismissed” and substituting a provision that “the Tribunal decides not to exercise any of the [Board’s powers] under section 1292 of the Corporations Act 2001 ... .”

7. The point addressed by the Board’s suggestion to delete reference to the 15 August 2006 Determination is a contention that the Determination is not itself a decision reviewable by the Tribunal. The Determination of 15 August 2006 was that the Board was “satisfied that Adrian Stewart Duncan has failed within the meaning of s1292(2)(d)(ii) [of the Corporations Act 2001] 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”. That Determination formally expressed the factual finding that was a pre-condition to the exercise of the Board’s power to “cancel, or suspend for a specified period” Mr Duncan’s registration as a liquidator. That power was, itself, contained in earlier parts of section 1292(2).
8. As the Board rightly contends, the 15 August 2006 Determination was not a decision that enlivened Mr Duncan’s ability to make a review application to the Tribunal under section 1317B of the Corporations Act 2001. The Board’s 15 August 2006 Determination was no more, but it was also no less, than a formal record of the Board’s satisfaction that its cancellation and suspension powers had been enlivened by the Applicant’s deficient performance as a liquidator. This determination of the Board’s satisfaction was an essential element of its functions, once ASIC had made an application to it in accordance with section 1292(1) of the Corporations Act 2001.
9. The Board’s 15 August 2006 Determination is significant not because it is unreviewable. It is significant because it was the threshold finding that the Board had to make before it could validly exercise the suspension and cancellation powers conferred by section 1292(2) of the Corporations Act 2001. In the exercise of the Tribunal’s review function under section 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal is itself empowered to “exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision”. It necessarily follows that if the review application to the Tribunal had proceeded to a contested hearing, the Tribunal would itself have had the function of determining its own satisfaction as to whether the Applicant’s conduct had been relevantly deficient to the extent necessary to permit exercise of the cancellation or suspension power conferred by section 1292(2) of the Corporations Act 2001.
10. Since the Tribunal’s function is to exercise the powers and discretions of the original decision maker, it would not have been necessary for the Tribunal either to consider the correctness of the Board’s own determination of satisfaction or to make any formal finding expressing actual disagreement with the Board’s determination. However, it would have been incumbent on the Tribunal to make a finding on the issue of its own satisfaction. That finding must have been explicitly recorded in any reasons for decision that the Tribunal published.
11. The position that must necessarily have applied if the matter had proceeded to a contested Tribunal hearing, and reached the result now propounded by the actively contending parties, is that the Tribunal’s formal decision would have set aside the Board’s suspension decision of 20 November 2006. In addition, the Tribunal’s reasons for decision, reasons which it would have been obliged to provide under section 43(2) of the Administrative Appeals Tribunal Act 1975, would necessarily have included its finding as to whether or not it was satisfied of Mr Duncan’s relevant default, for the purposes of section 1292(2) of the Corporations Act 2001.
12. Notwithstanding that reality, the position taken by the Board, in its request for a variation of paragraph 1 of the Tribunal’s 14 April 2009 decision, is that the Tribunal is confined to a decision that merely, and formally, sets aside the Board’s order of 20 November 2006. The Tribunal is, according to the Board’s contention, precluded from including in the terms of its decision any rejection of the factual determination that was the threshold for the exercise of the Board’s suspension power. The potential practical effect of this contention is highlighted by the Board’s argument in relation to the final paragraph of the 14 April 2009 decision. The Board contends that paragraph should read “In substitution for the decision set aside in Order 1, the Tribunal decides not to exercise any of the powers of the Companies Auditors and Liquidators Disciplinary Board under section 1292 of the Corporations Act 2001 in relation to the Applicant”.
13. The appearance that would be engendered by acceding to the Board’s contentions is that the Tribunal’s formal decision (i) endorsed the factual findings made by the Board in its 15 August 2006 Determination and (ii) nevertheless refrained from exercising the power to suspend or cancel that was enlivened by the factual findings involved in the Determination.
14. This appearance is not readily reconciled with the actual terms of the written agreement between Mr Duncan and ASIC. Indeed, their signed agreement is that the Tribunal should proceed “without admissions and without the Tribunal having to give reasons”. It is very clear, not only from the deliberate inclusion of that expression in the parties’ written agreement, but also from the nature of the factual controversy canvassed in the Tribunal’s interlocutory decision of 5 February 2009, that it is no part of the actual agreement between Mr Duncan and ASIC to endorse the factual findings contained in the Board’s 15 August 2006 Determination.
15. The Board’s proposed substitution for paragraph 3 of the 14 April 2009 decision simply does not reflect the actual agreement between Mr Duncan and ASIC. Nevertheless, the question remains whether the Tribunal’s decision must include some such provision. The Board contends that this consequence follows if the Tribunal sets aside the Board’s reviewable decision - as paragraph 1 of the 14 April 2009 decision purports to do. The Board contends that this follows by necessity from the terms of section 43(1)(c) of the Administrative Appeals Tribunal Act 1975.
16. The opening terms of section 43(1), to which I have already referred, permit the Tribunal “for the purpose of reviewing a decision” to exercise all of the powers and discretions of the original decision maker. The section then continues that the Tribunal “shall make a decision in writing:

(a) affirming the decision under review;
(b) varying the decision under review; or
(c) setting aside the decision under review and:
(i) making a decision in substitution for the decision so set aside; or
(ii) remitting the matter for reconsideration in accordance with any directions or recommendations of the Tribunal.”

17. The Board’s contention misconceives the effect of the obligation imposed by section 43(1)(c) of the Administrative Appeals Tribunal Act 1975. Whatever obligation is imposed by that provision must be understood as subject to the functions, powers and limitations relevant to the maker of the decision under review. In the present case the Board’s only relevant function, as authorised by section 1292 of the Corporations Act 2001, was to exercise a discretion to make an order of cancellation or suspension, if it was satisfied that the threshold conditions for the exercise of that power had been made out. If the Board was not satisfied either that the threshold conditions had been established, or that suspension or cancellation was not warranted, its function was simply to refrain from making any such order. The Tribunal, in the exercise of its review function, is in precisely the same position.
18. If the Tribunal decision is merely to set aside the Board’s decision, and the Tribunal does not make any order for cancellation or suspension, that decision in itself fully complies with any obligation imposed by section 43(1)(c). It already embodies both a decision to set aside the Board’s decision and a substituted decision not to make any order for cancellation or suspension. It is quite unnecessary for the Tribunal to proceed with the merely empty formality of formally and explicitly recording either that it is not making any additional consequential order, or that it is dismissing the original application. It is certainly unnecessary, and indeed it would be quite inappropriate in the circumstances of the present case, for the Tribunal to make a “substitute” order of the kind for which the Board contends. Any such order would be quite misleading in a case where the Tribunal had conducted a contested hearing and come to the affirmative conclusion that the threshold conditions for the exercise of the cancellation or suspension power had not been made out. It is equally inappropriate in the circumstances of the present case, where the agreement between Mr Duncan and ASIC explicitly contemplates that the Tribunal’s decision should not be taken in any way to endorse any of the factual findings made by the Board.
19. For these reasons, I reject the Board’s contention about the amendment of paragraph 3 in the Tribunal’s 14 April 2009 decision. I also reject the Board’s contention in relation to paragraph 1. Even though the Board's 15 August 2006 Determination is not itself a reviewable decision, it reflects a factual finding that was an essential precondition for that decision. Furthermore, the accuracy of that Determination was obviously a central point of contest between Mr Duncan and ASIC. It is also the point about which they have, in effect, “agreed to disagree” in order to arrive at a mutually acceptable resolution of the decision under review. The way in which Mr Duncan and ASIC agreed to deal with the matter was simply to record the fact of the Determination as a relevant part of that decision, as indeed it is. The actual form of words on which Mr Duncan and ASIC have agreed was that the Tribunal’s decision should be in the following terms “the decision of the First Respondent in proceedings N2006/1658 (“the Prior Proceedings”) in the Companies Auditors and Liquidators Disciplinary Board, consisting of the determination dated 15 August 2006 (“the Determination”) and Orders made on 20 November 2006 (“the Orders”), be set aside”.
20. Sections 42C(2) and (3) of the Administrative Appeals Tribunal Act 1975 permit the Tribunal to make a decision in accordance with the terms of an agreement between the parties. They also permit the Tribunal “in its decision in the proceeding” to give effect to the terms of an agreement between the parties that “relates to a part of the proceeding or a matter arising out of the proceeding”. The factual findings of an original decision maker that are a threshold pre-condition to the exercise of the decision-making power are obviously matters that comprise part of the review proceedings in the Tribunal. Where the parties’ agreement is to record a formal disavowal of those findings sections 42C(2) and (3) permit the Tribunal to make a decision in accordance with those terms and to give effect to the agreement in its decision.
21. It will be apparent from what I have said that I do not accept the Board’s contentions in relation to the formal content of the 14 April 2009 decision.
22. Finally, whilst the Board is unarguably correct in its observation that it was neither a party to the agreement between Mr Duncan and ASIC nor was the agreement signed by it or on its behalf, the Board did not contend that the 14 April 2009 decision was invalid on that account. The absence of any such contention is consistent with the Board’s original stance that it was a submitting party in the review proceedings.
    

I certify that the 22 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member P W Taylor, SC

Signed: ...............[sgd].................................................................

Associate

Date of Hearing On the papers

Date of Decision 29 May 2009