YFFM and Australian Securities and Investment Commission [2009] AATA 489 (30 June 2009)

Last Updated: 1 July 2009

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 489

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2009/0595

GENERAL ADMINISTRATION DIVISION		)
	Re		YFFM

Applicant

And

AUSTRALIAN SECURITIES AND INVESTMENT COMMISSION

Respondent

DECISION

Tribunal

Mr S Penglis, Senior Member

Date 30 June 2009

Place Perth

Decision

Pursuant to section 33(1)(a) of the Administrative Appeals Tribunal Act, 1975 (Cth) (AAT “Act”): Subject to 2, 3 and 4 below, the further hearing of this application is hereby stayed until further order. Within 28 days, the applicant must provide, to both the Tribunal and the respondent, an undertaking in terms acceptable to the Tribunal as to the manner in which the applicant will provide any financial services during the period of the stay. 3. Within 21 days the parties are to lodge with the Tribunal an Agreed Minute of Proposed Undertaking, or, failing agreement, Minutes of Proposed Undertaking contended for by each party. 4. The further hearing of this matter listed for 20 July 2009 is hereby vacated. 5. The parties have liberty to apply to the Tribunal for further directions (including with respect to the orders previously made by the Tribunal pursuant to section 41(2) of the AAT Act).

...(sgd) Mr S Penglis......

Senior Member

CATCHWORDS

Practice and Procedure – stay of application - application to review Barring Order made under the Corporations Act – respondent has briefed the Commonwealth DPP with a recommendation to institute criminal proceedings against the applicant with respect to an alleged contravention of the Corporations Act, being the same conduct upon which Barring Order was made – whether it was proper for the respondent, and now the Tribunal, to proceed to hear matter – whether the matter should be stayed as a matter of discretion – relevant principles to be applied – whether reviewable decision ought be set aside, or whether the Tribunal’s review of the decision ought be stayed – held that on the facts of the case, and subject to the applicant providing to the Tribunal and the respondent an undertaking in terms acceptable to the Tribunal as to the manner in which the applicant will provide financial services in the interim, any further hearing of the application to be stayed pending decision by the Commonwealth DPP as to whether to institute criminal proceedings against the applicant and, if so instituted, the conclusion of those proceedings.

LEGISLATION

Administrative Appeals Tribunal Act, 1974 (Cth) s 33(1)(a)

Corporations Act 2001(Cth) ss 920A, 920B, 1043A(1) and 1043A(2)

CASES

Australian Securities and Investment Commission v HLP Financial Planning (Aust) Pty Ltd [2007] FCA 1868; (2007) 164 FCR 487

Herron v McGregor (1986) 6 NSWLR 246

McMahon v Gould (1982) ACLR 192

Re AWB Limited; Australian Securities and Investment Commission v Flugge [2008] VSC 473; (2008) 252 ALR 566

Sage v ASIC [2005] FCA 1043

Secretary, Department of Social Security and Pluta (1991) 23 ALD 317

Sogo Duty Free Pty Ltd and Commissioner of Taxation [2005] AATA 1298; (2005) 89 ALD 236

Street Nation Pty Ltd and Australian Communications Authority [2004] AATA 1251; (2004) 86 ALD 413

YFFM and Australian Securities and Investments Commission [2009] AATA 409

30 June 2009

Mr S Penglis, Senior Member

REASONS FOR DECISION

1. On 4 February 2009 a delegate of the respondent made an order pursuant to sections 920A and 920B of the Corporations Act 2001 prohibiting the applicant form providing any financial services for a period of five years.
2. That is the reviewable decision the subject of this application.
3. On 6 March 2009 I made orders pursuant to section 41 (2) of the Administrative Appeals Tribunal Act 1975 (“AAT Act”) staying the reviewable decision and making (what is commonly referred to as) a “non-publication order”. I also made an order pursuant to section 35 of the AAT Act restricting the publication of the applicant’s name.
4. I provided written reasons in respect of those orders: YFFM and Australian Securities and Investments Commission [2009] AATA 409.
5. The delegate’s reasons for her decision disclose that the applicant had requested that the delegate stay the matter pending the outcome of foreshadowed criminal proceedings against the applicant.
6. As part of her reasons for making the reviewable decision, the delegate gave her reasons for not acceding to that application
7. Before the Tribunal, Mr Donaldson, SC, Counsel for the applicant, made two primary submissions. His first submission was that the delegate erred in proceeding to deal with the matter and that, on that basis alone, the Tribunal should thus set aside the reviewable decision.
8. His second submission, in the alternative, was that for the same reasons as he advanced in support of his submission that the delegate had erred in proceeding to hear the matter, the Tribunal ought stay any further hearing of the application whilst the prospect of criminal proceedings loomed large on the horizon. Mr Donaldson made it clear that the applicant accepted that any stay would need to be conditional upon the applicant providing an undertaking in terms acceptable to the Tribunal as to how the applicant would provide any financial advising services in the interim (which Mr Donaldson submitted would more than adequately address and protect the public interest requirements in the meantime).
9. Both Mr Donaldson and Mr Quinlan, Counsel for the respondent, agreed that that issue ought best be determined as a preliminary issue, a course with which the Tribunal agreed.

THE REVIEWABLE DECISION

10. As has been noted, the reviewable decision is dated 4 February 2009 and is to prohibit the applicant from providing any financial services for a period of 5 years pursuant to sections 920A(1) and 920B(2) of the Corporations Act. The basis for the decision was a finding that the applicant procured clients to acquire shares in contravention of section 1043A(1) of the Corporations Act and communicated to clients “inside information” in contravention of section 1043A(2) of the Corporations Act.
    
11. Section 1043A (1) of the Corporations Act relevantly prohibits a person who possesses “inside information” and who knows or ought reasonably to know that the information is not generally available and that if the information were generally available a reasonable person would expect it to have a material effect on the price or value of shares, from (amongst other things) procuring another person to acquire those shares.
12. Section 1043A(2) of the Corporations Act relevantly prohibits a person who possesses “inside information” and who knows and ought reasonably to know that the information is not generally available and that if the information were generally available a reasonable person ought expect it to have a material effect on the price or value of shares and the shares are able to be traded on a financial market in Australia, from (amongst other things) directly or indirectly communicating the information to another person if he knows or ought reasonably to know that the other person was likely to acquire such shares.
13. A contravention of either section 1043A(1) or (2) of the Corporations Act is a criminal offence.
14. Before the delegate, the applicant repeated an application that he had previously made to the delegate (and which the delegate had previously rejected), namely for (what was described as) an “adjournment” of the s 920A procedure. Although described as an “adjournment” application, it was common cause before the Tribunal that the application was in fact for a stay of the procedure.
15. In her reasons for decision, the respondent’s delegate dealt with that matter as follows:

“My previous decision to refuse the request for an adjournment was based on the 2005 decision of Goldberg J of the Federal Court in Sage v ASIC. In making that decision I rejected a submission that Save v ASIC was wrongly decided or could be distinguished.
It is again submitted that Sage v ASIC was wrongly decided. Reference is made to the recent decision of Robson J of the Supreme Court of Victoria in Re AWB Ltd and to the 2007 decision of Finkelstein J of the Federal Court in ASIC v HLP Financial Planning (Aust) Pty Ltd.
Re AWB Ltd and ASIC v HLP Financial Planning (Aust) Ltd were each a civil proceeding. A s 920A hearing is an administrative proceeding, not a civil proceeding. Accordingly, neither of these cases is authority for the proposition that Save v ASIC was wrongly decided.
The other authorities referred to in the submissions confirm that whether proceedings should be stayed pending the resolution of criminal proceedings is a discretionary decision to be exercised in the circumstances of each case.
The mere fact that proceedings are pending in a court of law does not mean that any parallel or related administrative inquiry, conducted for proper administrative purposes, constitutes an interference with the due administration of justice in that court. The relevant question is whether the continuation of the hearing, in this case a hearing under s 920A, would constitute contempt of the court in which the criminal proceedings are pending.
In this case, no criminal charges have yet been laid against the applicant. In this circumstance, there is no risk that the continuation of the s 920A hearing would constitute contempt of criminal proceedings. Even if charges are laid in the future, for the reasons given by Goldberg J in Sage v ASIC, I am not satisfied that a substantial injustice will occur if the banning order hearing is finally determined.
It was submitted that it would be possible for ASIC to impose interim conditions under s 914A (1) on the applicant to protect the public until the issue of the criminal proceedings was finalised. I do not accept this submission. Section 914 A applies only to conditions imposed on a financial services licence granted under s 913B. The applicant does not hold a financial services licence, but rather is an authorised representative of a financial services licensee under s 916A.”

THE RESPONDENT’S RECOMMENDATION THAT CRIMINAL CHARGES BE LAID

16. By letter dated 27 October 2008 from the Commonwealth Director of Public Prosecutions (“Commonwealth DPP”) to the applicant’s solicitors, the Commonwealth DPP confirmed receiving a brief from the respondent “in relation to” the applicant. That fact was confirmed in an affidavit before the Tribunal of Brian Keith Colliss sworn 4 May 2009, Mr Colliss being an investigator with the respondent at its Perth office.
17. In that affidavit Mr Colliss also noted that the respondent had offered the applicant an opportunity of participating in a voluntary record of interview, stating that the respondent “would usually offer a person the opportunity of participating in a voluntary (record of) interview when a brief has been forwarded by (the respondent) to the (Commonwealth DPP) recommending that criminal charges be laid against that person”.
18. Mr Colliss further noted that as of 4 May 2009, the Commonwealth DPP had not advised the respondent of its decision relating to the institution of criminal proceedings against the applicant and that no such criminal proceedings have in fact been instituted.
19. Although not put beyond all doubt by any material before the Tribunal, it is open to me to infer (and I do so infer) that the criminal charges which the respondent has recommended to the Commonwealth DPP to be laid against the applicant are for contraventions of section 1043A(1) and (2) of the Corporations Act in respect of the same or substantially the same facts in respect of which the banning order was made. Indeed, the matter proceeded before me on that basis.

THE LAW

20. In Secretary, Department of Social Security and Pluta ( 1991) 23 ALD 317 the Full Tribunal (comprising President O’Connor J, and Members Holligan and Palvan) recognised the difficulties arising where there is overlap between an application before the Tribunal and criminal proceedings. The Full Tribunal noted (at [11]) that the applicant “may run the risk of incriminating herself, or if she chooses to avail herself of the privilege, the Tribunal would need to make a decision without being apprised of all the relevant facts in the preferred manner” (11).
21. The Tribunal stated (at [10]) that it:

“.... would have no difficulty in granting the adjournment sought by the respondent if criminal proceedings were under way. Indeed, in a case where the issues in criminal proceedings are the same as those before the Tribunal, it may well be a contempt of court for the Tribunal to proceed. Again, if matters were to go to the stage of consideration by the Prosecutions Section of the department before referral to the Director of Public Prosecutions, that is, if a criminal prosecution was actively contemplated, the Tribunal would have little difficulty in adjourning proceedings until the matter had been dealt with”.

22. More recently in Sogo Duty Free Pty Ltd and Commissioner of Taxation [2005] AATA 1298; (2005) 89 ALD 236, a stay of the Tribunal’s hearing was granted of two grounds. First, that the hearing could lead to the Tribunal being in contempt of pending criminal proceedings. Secondly, pursuant to section 33(1) (a) of the AAT Act, on the grounds that there was a plausible apprehension of injustice being caused if the Tribunal’s proceedings were heard before the criminal proceedings.
23. After reviewing the authorities, Member Hughes held as follows:

“[19] Notwithstanding Mr Sest’s contentions on behalf of the respondent, the Tribunal considers that a stay of proceedings is warranted on a number of grounds.
[20] It is by no means clear, based on the existing authorities, that to proceed with the application prior to the criminal proceedings would, under any circumstances, necessarily place the Tribunal in contempt of the criminal proceedings. Nevertheless, the learned pronouncements on the subject to date are such that there is a realistic prospect of such a finding, under certain circumstances at least; and this factor has been taken into account by the Tribunal in reaching its conclusion.
[21] The Tribunal is concerned that Chiem's "right of silence" could be compromised. Mr Sest argued that this could not be the case because Chiem had already provided detailed statements to the authorities. These statements were, however, only in the form of answers provided at interviews and should not be regarded as comprehensive, complete or necessarily informative – there is a real possibility that a substantially greater amount of elaboration would be required from Chiem upon cross-examination in proceedings before the Tribunal. The use which could be made in subsequent criminal proceedings of information so disclosed at the Tribunal potentially creates a risk of injustice in the criminal proceedings which is more than "merely notional".
[22] The respondent complains that the applicants have not provided a detailed explanation of precisely how Chiem could be compromised by giving evidence to the Tribunal. To ask the Applicants to provide such elaboration, however, might only compound the problem, for it could require the Applicants to disclose matters which might properly be the subject of Chiem's right to remain silent in the criminal proceedings. The Tribunal is satisfied that the prospect of Chiem being required to give evidence, and being subject to cross-examination, in relation to the same transactions which would be the subject of the committal proceedings, is sufficient to create a plausible apprehension of injustice and therefore contempt of the committal proceedings.
[23] For much the same reasons, the Tribunal considers it appropriate to exercise its discretion under s 33(1) (a) of the AAT Act to grant a stay of proceedings. In this regard, the Tribunal has taken account of the Respondent's assertion that no substantial prejudice would be suffered by Chiem. The Tribunal considers, however, that for the same reasons that a hearing of the applications might constitute contempt of the criminal proceedings, the hearing of the applications might create a substantial prejudice to the Applicants or, more particularly, Chiem. Added to this conclusion is the reality that, particularly by way of comparison, the respondent would not be prejudiced by the granting of the stay of proceedings. The Tribunal accepts that protracted delays in the determination of an application are arguably inconsistent with the Tribunal's objective under s 2A of the AAT Act to provide a review mechanism which is, inter alia, quick, but at the same time the Tribunal does not consider it would be fair or just to insist that the matter proceed in circumstances which might prejudice the rights of an individual at a forthcoming criminal trial, which might place the Tribunal in contempt of those criminal proceedings or which might prejudice the appropriate disposition of those criminal proceedings.
[24] The Tribunal does not consider that the current proceedings should be adjourned sine die. The outcome of the committal proceedings, whatever that outcome might be, could provide a basis for the Tribunal to re-evaluate its current view that a stay of proceedings is warranted. Accordingly, it is the conclusion of this Tribunal that these proceedings should be stayed until the conclusion of the committal proceedings, whereupon the Tribunal will consider the further disposition of this matter.”

24. It is clear that the respondent’s delegate placed considerable weight on the decision of Goldberg J of the Federal Court of Australia in Sage. That case concerned an application for an interlocutory injunction restraining the respondent from conducting a hearing pursuant to section 920A of the Corporations Act pending the determination of certain criminal proceedings which had been commenced against the applicant. His Honour noted that it had been submitted on behalf of Mr Sage that he would be prejudiced if the respondent proceeded with the banning order hearing by reason of:

“(a) a potential breach of his “right to silence” in a criminal proceeding;
(b) potentially having to outline his evidence and witnesses and any defence prior to the testing of the strength of the prosecution case in the criminal proceeding;
(c) a real potential of the miscarriage of justice; and
(d) the burden of preparing for, and potentially appearing in, both proceedings concurrently.”

25. His Honour further noted that Mr Sage also contended that he would be prejudiced if a banning order is made pursuant to section 920A prior to the criminal proceedings by reason of:

“(a) the adverse finding that would be made against him in respect of any order being made, and
(b) the adverse inference that will be drawn in a criminal proceeding.”

26. After reviewing various authorities and concluding that cases (such as McMahon v Gould (1982) ACLR 192) which deal with the exercise of the court’s discretion in determining an application for a stay of civil proceedings articulate principles “some (of which) may be of assistance, by way of analogy”, his Honour concluded that it was not correct to say that the “principles which applied to a stay proceedings because of pending criminal proceedings are the correct principles to apply in the present circumstances. The procedure which has been commenced pursuant to section 920A of the Corporations Act is an administrative proceeding instituted by the Commissioner as part of its administrative functions under the Act. In such circumstances the relevant principles to consider are those which relate to whether administrative proceedings impinge upon court proceedings to such an extent that there may be considered as bringing about potential contempt of court”.
27. His Honour concluded (at [24]) that “the relevant question to ask is whether the continuation of a hearing pursuant to section 920A will constitute contempt of the court in which the criminal proceedings are pending”. In that respect, His Honour held ([at 26]):

“If the banning order hearing proceeds and the applicant participates in it, it is problematic as to the extent to which he will participate in it. The applicant can either give evidence, make submissions or perhaps even call for persons who have made written statements which will be before the delegate to be present for cross-examination, In this context he may well have to present what will be seen as his defence to the criminal proceeding as an answer or response to the banning order proposal. However, he will not be compelled to give evidence or to participate in any way. It will not, inevitably, impinge upon the applicant’s “right to silence”. It will be a matter for him as to whether he presents any evidence at the banning order hearing.”

28. His Honour then noted that it had also been submitted that if Mr Sage remained silent during the banning order hearing with a result that a banning order was made against him, an adverse inference would be drawn against him in a criminal proceeding. As to that His Honour held (at [27]):

“I consider this submission to be misconceived. Even if the applicant did remain silent and a banning order was made against him I cannot see any basis upon which the existence or content of the banning order could be admitted into evidence in the criminal proceeding or used against him. I do not consider that there is any basis upon which an adverse inference could be drawn from the banning order at the criminal proceeding whether by a judge or a jury. Even if evidence of a banning order was admissible to the criminal proceeding, I doubt that any probative value could be accorded to it, considering the manner in which the banning order hearing proceeds.”

29. His Honour then considered the consequences of restraining the continuation of the banning order hearing. His Honour held (at [30]):

“It would result in a considerable delay in determining whether a banning order should be made. If I were to grant a restraint, then there would also be a considerable period of time during which there would be no restraint upon the applicant in providing financial services. It is undesirable that there be a delay in the hearing and determination of administrative proceedings of this nature. When such a hearing is proposed it is desirable that it proceed to a conclusion expeditiously so all parties know where they stand on the issue.”

30. His Honour also addressed a proposal which had been made on behalf of Mr Sage that, in order to deal with position pending the determination of the proceeding, he would offer an enforceable undertaking that he would not provide financial services pending the determination of the proceedings. As to that His Honour held ([at 31]) as follows:

“The difficulty with that course is, as counsel for the Commission pointed out, that pursuant to s 922A (1) of the Act the Commission must establish registers relating to financial services, which would be open for public inspection. If a banning order is made, reg 7.6.06 of the Corporations Regulations 2001 requires details of the banning order to be placed on the register including the name of the person banned. The making of the banning order is then available as a public record. The register can be searched by persons, such as interested investors or their advisers, pursuant to s 922B(1) of the Act. If an injunction were to be granted, or an undertaking accepted by the Court, there would be no similar basis upon which the fact that the applicant had been restrained from providing financial services or had undertaken to the Court not to provide such services, would be readily searchable by the investing public. To that extent, accepting an undertaking from the applicant would not be an adequate alternative to a banning order if it were ultimately to be made by the Commission.”

31. As a result, His Honour concluded (at [32]) that he was “not satisfied that a substantial injustice will occur if the banning order hearing proceeds and, if the delegate thinks it appropriate, a banning order is made” and thereby dismissed the application for an interlocutory relief.
32. The principles to be applied in determining whether or not there may be a contempt of court is the subject of detailed reasons for decision of Deputy President Forgie of this Tribunal in Re Street Nation Pty Ltd and Australian Communications Authority [2004] AATA 1251; (2004) 86 ALD 413. After referring to the Tribunal’s decision in Pluta, the Deputy President held as follows:

“18. The Tribunal did not explain how the Tribunal’s proceeding could be a contempt of court but Davies J did in Re Taxation Appeals (No. 163) and Commissioner of Taxation (VT85/618 and others, Decision No. 3500, 26 May 1987). Where the issue to be decided in criminal proceedings is precisely the same as that to be decided in the Tribunal’s proceedings, Davies J did not decide whether there would be contempt of court were the Tribunal to proceed but observed:
"... It is ... strongly arguable that the investigation of that issue by this Tribunal, including the examination and cross-examination of witnesses and the production of documents, while the same issue is being considered in the committal proceedings, would be a contempt of court as prejudicing the committal proceedings and the subsequent conduct of the trial." (at par. 12)
19. There is an exception to this and that occurs if the action that would otherwise be a contempt of court has been expressly authorised by legislation (Lockwood v Commonwealth [1954] HCA 31; (1954) 90 CLR 177 at 185 per Fullagar J). Care must be taken to ensure that the course of action is specifically authorised. In the case of Lockwood, Fullagar J was considering the Royal Commission Act 1954 specifically authorising the issue of letters patent to the Petrov Commissioners to enquire and report. The legislation sets out the terms of reference for the inquiry.
20. There is a difference between that legislation, which is directed to a specific inquiry, and the Royal Commissions Act 1902, which is not. Instead, the Royal Commissions Act 1902 provides a general framework for the establishment and conduct of Royal Commissions and the appointment of Commissioners. In 1981, a Commissioner was appointed under the Royal Commissions Act 1902 to enquire into any illegal activities by the Builders’ Labourers’ Federation ("BLF"). Shortly after, the Crown in right of Victoria and the Crown in right of the Commonwealth applied to the Federal Court for an order directing the cancellation of the BLF’s registration under the Conciliation and Arbitration Act 1904. The BLF sought an order in the Federal Court to restrain the Commissioner from proceeding with his inquiry until the determination of the cancellation application. Its application failed but, on appeal, the Full Court made an order restraining the Commissioner from conducting his inquiry in public.
21. On appeal, a majority of the High Court (State of Victoria v Australian Building Construction Employees’ and Builders Labourers’ Federation [1982] HCA 31; (1982) 152 CLR 25, 41 ALR 71, Gibbs CJ, Mason, Murphy, Wilson and Brennan JJ) determined that the Commissioner was not in a position where he was incapable of being in contempt of court (at 55, 87; 94, 118-119; 104, 126; 129, 146; and 158-9, 169-170). A differently constituted majority (Gibbs CJ, Mason, Aickin and Wilson JJ), determined that the Commissioner was not in contempt of the Federal Court were he to proceed with his inquiry. They noted that the Commissioner was not required to pre-judge any of the issues that arose in the Federal Court proceedings and the evidence he took was not expected to be directed to those issues. The principles on which they determined that the Commissioner’s inquiry would not be contempt of court if it were to proceed and to do so in public were:
Contempt of court will occur in circumstances of the sort considered by the High Court only if there is an actual interference with the administration of justice or "a real risk, as opposed to a remote possibility", that justice will be interfered with (Attorney-General v Times Newspapers Ltd [1974] AC 273 at 299). There must be a substantial risk of serious injustice (per Gibbs CJ at 56, 88, per Mason J at 99, 122);
The reasons behind contempt in those circumstances is the "real and definite tendency to prejudice or embarrass" the proceedings in the court (John Fairfax & Sons Pty Ltd v McRae [1955] HCA 12; (1955) 93 CLR 351 at 372) (per Gibbs CJ at 56, 88).
If the commission were required to find that a person were guilty or not of a criminal offence, it would be in contempt of court if a prosecution were commenced during the course of its inquiry and it were to continue its inquiry on that matter before the completion of the prosecution (per Gibbs CJ at 54, 87 and see the later case of Hammond v Commonwealth of Australia [1982] HCA 42; (1982) 152 CLR 188 at 198-9[1982] HCA 42; , 42 ALR 327 at 333-4, per Gibbs CJ);
If publication of material before a commission would prejudice mankind against a litigant, that publication would prejudice any pending trial by jury (per Gibbs CJ at 57, 89).
If the proceedings before the Commissioner were to be publicised and if the trial is before a judge alone, it would not be contempt for it is part of the everyday task of a judge to put public discussion aside (Attorney-General v British Broadcasting Corporation [1981] AC 303 at 342-3) (per Gibbs CJ at 58, 90, Mason J at 102, 123-4). "The position may be different if the publication exposes the litigant to public and prejudicial discussion of the merits of the facts of his case while it is still pending" (Attorney-General v Times Newspapers Ltd at 310) (Gibbs CJ at 57-58, 89-90);
There is a public interest in a person’s case being tried free of all prejudice but that public interest must be weighed against other public interests. Those other public interests include the discussion of public affairs and the denunciation of public abuses, actual or supposed (Attorney-General v Times Newspapers Ltd at 296-7 citing with approval Ex parte Bread Manufacturers Ltd; Re Truth and Sportsman Ltd (1937) 37 SR (NSW) 242 at 249). They also include the importance of the public’s having access to information that it has a legitimate interest in knowing for without information there can be no proper discussion of public affairs and the denunciation of public abuses, actual or supposed. (per Gibbs CJ at 59-60, 91 and Mason J at 94-98, 119-121, per Wilson J at 133-6, 149-151);
The balancing of the public interests is a matter of law and not for a court to decide in a particular case (per Gibbs CJ at 60, 91-92);
Regard must be had to the circumstances in which material is to be published outside of court proceedings. If the material is published in a newspaper in advance of a criminal trial, the paramount public interest is in maintaining the administration of justice free from prejudice and interference. The countervailing public interest in freedom of discussion is exclusively related to the issue to be tried in the court i.e. the person’s guilt or innocence. In that situation the public interest in freedom of discussion is subordinated to the administration of justice. (per Mason J, at 98-99, 122)
Proceedings before a Royal Commission attract publicity and the public has a substantial and legitimate interest in knowing what is happening before the Commissioner. That is a public interest that is not easily subordinated to the need to maintain the administration of justice free from interference (per Mason J at 99, 122);
If there were a real risk that the Commissioner’s continuing conduct of the proceedings would deter witnesses from coming forward to give evidence to the Federal Court or would influence the evidence that they gave, there would be reasonable grounds to apprehend that the conduct of the inquiry would amount to contempt of court (per Gibbs CJ at 58-59, 90). That must be determined on something more solid than speculation (per Gibbs CJ at 59, 91, Mason J at 103, 125); and
Even if public proceedings held by the Commissioner prejudiced or biased the public mind against the BLF, any prejudice that arose would be of a general character as the Commissioner was not examining the specific issues arising before the Federal Court. (Mason J at 103-4, 125-126)
22. The case of Hammond v Commonwealth of Australia concerned an inquiry into the meat industry. An information was laid against Mr Hammond that he conspired with others to export a prohibited export. At the commission, he was directed to answer questions but he sought an injunction restraining his examination until after the trial of the conspiracy charge. It was assumed for the purposes of the case that Mr Hammond could not claim the privilege against self-incrimination at the commission. Gibbs CJ, with whom Mason J agreed, said that:
" Once it is accepted that the plaintiff will be bound, on pain of punishment, to answer questions designed to establish that he is guilty of the offence with which he is charged, it seems to me inescapably to follow, in the circumstances of this case, that there is a real risk that the administration of justice will be interfered with. ..." (at 198, 333)
23. As to whether the commission could report on the matters of its inquiry, Gibbs CJ said that there was no case for restraining it:
"... There is no suggestion that the Commissioner will report directly on the question whether the plaintiff is guilty of the offence charged. It is a mere speculative possibility that anything in his report will affect the plaintiff’s trial. Since it has not been established that there is a real risk that the report will interfere with the administration of justice, the application ... must fail. It would very seriously impede the conduct of executive inquiries into matters of public importance if no report could be made on a matter that touched and concerned a pending criminal charge. ... the theoretical possibility that the trial of an accused person may be prejudiced cannot justify the courts in stultifying proper inquiries into matters of public interest simply because they relate in some way to the subject of a charge. In assessing the likelihood of prejudice, the court should be entitled to assume that the Executive will exercise a sound discretion in making a decision whether any part of the report that might be prejudicial will be made public while criminal proceedings are pending." (at 199, 334)
24. In his judgment, Deane J noted that "... the mere fact that proceedings are pending in a court of law does not mean that any parallel or related administrative inquiry, conducted for proper administrative purposes, constitutes an interference with the due administration of justice in that court. ..." (at 206, 340). His Honour, however, drew a distinction between such administrative inquiries as to whether penal proceedings should be instituted while a civil trial is proceeding and those in an administrative tribunal. He said of the latter:
"... it is fundamental to the administration of criminal justice that a person who is the subject of pending criminal proceedings in a court of law should not be subjected to having his part in the matters involved in those criminal proceedings made the subject of a parallel inquisitorial inquiry by an administrative tribunal with powers to compel the giving of evidence and the production of documents which largely correspond (and, to some extent, exceed) the powers of the Criminal Court. Such extra-curial inquisitorial investigation of the involvement of a person who has been committed for trial in the matters which form the basis of the criminal proceedings against him constitutes, in my view, an improper interference with the due administration of justice in the proceedings against him in the Criminal Court and contempt of court. ..." (at 206, 340)
25. It is clear from these principles that, whether or not there is contempt of court, depends upon whether the facts in a particular situation show that there would be interference with the due administration of the law in and not upon principle that a particular type of proceeding always constitutes contempt of court.”

THE PARTIES’ CONTENTIONS

33. On behalf of the applicant it was submitted that the applicant is in ”an impossible position”, being the same position the applicant was in before the respondent’s delegate, in endeavouring to properly answer this matter pending a determination by the Commonwealth DPP whether or not to proceed with criminal charges against the applicant.

34. On behalf of the applicant it was submitted that the decision of Goldberg J in Sage “is in error” and referred to two decisions to support that submission. Those decisions were Re AWB Limited: Australian Securities and Investment Commission v Flugge [2008] VSC 473; (2008) 252 ALR 566 and Australian Securities and Investment Commission v HLP Financial Planning (Aust) Pty Ltd [2007] FCA 1868; (2007) 164 FCR 487. Particular emphasis was placed on the decision of Robson J of Supreme Court of Victoria in Re AWB where, (at [58]) his Honour said as follows:

“For the purposes of this case I assume I am bound to follow the McMahon v Gould [105] line of authorities. Nevertheless, I wish to add my voice to those at first instance suggesting that an appellate court may wish to reconsider McMahon v Gould.[106] In particular, an appellate court may consider that the right of silence should not only be recognised but protected by the courts by preventing a defendant from being effectively compelled to waive his right of silence and thereby help those who seek to prove an offence by requiring him to defend civil actions relating to the same or similar conduct the subject of existing or potential criminal proceedings before those civil proceedings are completed. Compelling the defendant to defend civil proceedings, particularly those which impose a penalty, may assist the Crown in its prosecution by putting the Crown onto a train of inquiry or enable it to adjust its case to meet the anticipated defence in advance. It might be thought that such a circumstance denies the defendant his or her basic common law right to have the Crown establish its case against him or her without any assistance from the defendant”.

35. On behalf of the applicant it was noted that the decision in Re AWB post dates the reviewable decision and that HLP Financial Planning is to a similar effect.
36. It was submitted on behalf of the applicant that the respondent’s submissions (which are summarised next) which distinguish AWB and HLP on the basis that the section 920A procedure is of an administrative nature, not a civil proceeding, were incorrect, and pointed to the oft quoted from judgment McHugh JA (as his Honour then was) in Herron v McGregor (1986) 6 NSWLR 246 where, at 266, his Honour says as follows:
“No doubt it is only proper that, while criminal proceedings are pending disciplinary proceedings should not be brought on for hearing. But this does not dispense with the obligation of the complainant, in the interests of a fair hearing and the public interest, to lodge his complaint. In a proper case it may also be desirable to lodge a complaint with the Board so as to initiate a fitness inquiry under s.30. I see nothing to prevent the Medical Board in an appropriate case from temporarily suspending a practitioner while criminal proceedings are pending if, after hearing him, it thinks that he is not fit to practise. The hearing need not be a full hearing. The rules of natural justice are flexible enough to deal with this situation...”

37. On behalf of the applicant it was submitted that if I were to be satisfied that the delegate should have not proceeded with the procedure, that being a part of the reviewable decision, I should set aside the reviewable decision.

38. In the alternative, it was submitted that I ought stay the further hearing of this matter until the issue of criminal proceedings had been determined one way or the other pursuant to section 33 (1)(a) of the AAT Act. That section provides that the Tribunal’s procedure “is, subject to (the AAT Act) and the regulations and to any other enactment, within the discretion of the Tribunal”

39. It was also further submitted on behalf of the applicant that even if Sage were to be applied, His Honour in that case did not proceed to further consider the prospects of a jury finding out about the banning of the applicant of their own devices. In this regard the applicant referred the Tribunal to the decision of Finkelstein J in HLP where (at [59]) his Honour said as follows:

“Imagine what would happen if a jury discovers that a civil court has ruled that Mr Berlowitz’ conduct is illegal. A judge presiding over the criminal trial would be obliged to tell the jury to leave that out of account. It is axiomatic in our courts that jurors can be trusted to leave out of their consideration things that they are instructed to leave out. Many regard this kind of instruction as little more than a wishful thinking. Perhaps the jurors will have explained to them that you made the ruling and acted on evidence not before the jury and that in any event a lower standard of proof was required in a civil court. Whether those instructions will result in a fair criminal trial may be strongly doubted.”

40. For the respondent, Mr Quinlan submitted that the decision of Goldberg J in Sage was sound and that cases such as McMahon, AWB and HLP Financial Planning were concerned with civil actions, not administrative actions. It was further submitted on behalf of the respondent that if the Tribunal were to consider McMahon’s case to be relevant to the matter at hand, then even if the Tribunal had reservations about what was said in that case, it is binding upon and must be applied by the Tribunal.

41. It was submitted on behalf of the respondent that, particularly in the absence of any pending criminal proceedings and having regard to the fact that there was no obligation upon the applicant to give evidence before the Tribunal – indeed the Tribunal had been informed that the applicant would not do so if the matter were not to be stayed – there was no prospect of a contempt occurring if the Tribunal continued with the hearing and made and published its decision and that there was no reason for me to conclude that to proceed in all the circumstances would cause integrity of the Tribunal’s process to be questioned.

42. In the alternative, it was submitted on behalf of the respondent that if I were persuaded to the view that the Tribunal should not proceed with the matter (and thereby also conclude that the respondent’s delegate should not have proceeded), the proper result was not for the Tribunal to set aside the reviewable decision, but was for the Tribunal to stay the hearing of the matter pursuant to section 33(1)(a) of the AAT Act. In this regard Mr Quinlan submitted that the Tribunal’s function was not to carry out an administrative review of the respondent’s decision and processes, but to stand in the shoes of the respondent’s delegate and thus determine for itself how to proceed with a review of the substantive decision as opposed to the process by which it was arrived at.

THE RELEVANT PRINCIPLES

43. I consider the relevant legal principles to be those identified in the Tribunal’s decisions to which I have referred and in Sage.

44. In particular, I accept the respondent’s submission that cases such as McMahon, Re AWB and HLP Financial Planning do not articulate the principles relevant to a consideration of whether or not administrative proceedings (as opposed to civil proceedings) ought to be stayed because of pending or likely criminal charges.

45. The questions for determination therefore are whether:

• the hearing and determination of this matter by the Tribunal may cause the Tribunal to be in contempt of court as prejudicing any subsequent criminal prosecution of the applicant and/or
• the proceedings ought be stayed in order to preserve the integrity of the Tribunal’s process.

ANALYSIS

46. I am satisfied that the hearing and determination of this matter by the Tribunal may cause the Tribunal to be in contempt of court in the sense of prejudicing subsequent criminal prosecution of the applicant. Whilst there are no such proceedings presently pending, I make the following findings of fact:

(a) The respondent has requested the Commonwealth DPP to prosecute the applicant for contraventions of sections 1043A(1) and (2) of the Corporations Act;

(b) The Commonwealth DPP is presently considering that recommendation;

(c) The factual foundation supporting the respondent’s recommendation to the Commonwealth DPP to lay criminal charges against the applicant are the same or substantially the same as those in respect of which the banning order, the subject of this application, was made by the delegate of the respondent.

47. This is therefore a case such as that contemplated by the Full Tribunal in Pluta in respect of which “the Tribunal would have little difficulty in adjourning proceedings until the matter had been dealt with”, namely where “a criminal prosecution (is) actively contemplated”.

48. In the same way, but to use the language employed by Member Hughes in Sogo, I am satisfied that the prospect of the applicant being required to give evidence, and being subject to cross-examination, in relation to the same transactions which would be the subject of the possible criminal proceedings is sufficient to create a plausible apprehension of injustice and therefore contempt of any criminal proceedings which may be commenced, such proceedings being actively considered by the Commonwealth DPP.

49. I accept, as was submitted on behalf of the respondent, that there is no prospect of the Tribunal’s proceedings encroaching upon the applicant’s “right to silence” as the applicant had stated, through his Counsel, that if the proceedings were not stayed, he would not give evidence. That, however, does not address the problem inherent in the Tribunal proceeding (as the respondent’s delegate did) to determine the matter without the applicant giving evidence so as to retain his “right to silence” in the face of possible criminal charges. In that situation, the Tribunal may be required to make findings (both as to fact and law) that the applicant has contravened either or both of sections 1043A(1) and (2) of the Corporations Act and in circumstances where the Tribunal knows that such findings would, consistent with the respondent’s undoubted duty, be widely published (including on the internet).

50. In this regard the respondent relied upon the decision of Goldberg J in Sage re produced at paragraph 26 of these Reasons.

51. The applicant, on the other hand, relied upon the decision of Finkelstein J in HLP reproduced at paragraph 39 of these Reasons.

52. I accept without hesitation the observations made by Goldberg J in this regard. However, his Honour did not go on to contemplate the potential damage that could be caused to criminal proceedings if the jury were to learn that this Tribunal had made findings that the applicant had contravened the Corporations Act by and in the same respect as the jury was being invited by the Prosecution to so find. The prospect of that occurring in this case is not fanciful given that the banning order and also the Tribunal’s decision will be easily searchable on the internet as it will be a published decision of this Tribunal and will be “searchable” on the respondent’s website. Then, of course, there is the prospect of the matter being given publicity in the media.

53. I accept that if that were to occur steps could be taken by the presiding trial judge in an endeavour to remedy the position. The point is, however, this Tribunal should not, if possible, do anything which it knows may well bring about such a state of affairs.

54. Furthermore, I find that the proceedings ought to be stayed in order to preserve the integrity of the Tribunal’s process.

55. It is, of course, a trite proposition that the Evidence Act, 1995 (Cth) does not apply to proceedings before the Tribunal. Accordingly, section 128 of the Evidence Act, which is designed to protect the evidence given in proceedings to which the Act applies from being used against the person giving the evidence in subsequent criminal proceedings where the person would otherwise be able to invoke the privilege against self-incrimination, does not apply to evidence given in this Tribunal. I note that although similar provisions exist in at least some State equivalents of this Tribunal (see, for example, s68 of the State Administrative Appeals Tribunals Act, 2004 (WA)). The AAT Act contains no such provision.

56. In those circumstances, again unless the result simply cannot be avoided, for this Tribunal to require someone in the position of the applicant to either waive their undoubted “right to silence” or proceed without evidence would, in my opinion, cause the integrity of the Tribunal’s process to be compromised, let alone merely questioned.

57. For all the reasons I have given I therefore conclude that, on the facts of this case, my discretion to stay the proceedings is enlivened. The issue then becomes whether or not it ought be exercised.

EXERCISE OF DISCRETION

58. A proper balance must be struck between the private interest of the applicant and the public interest inherent in the banning order procedure provided by the Corporations Act.

59. For principally the same reasons as stated in my previous reasons for decision when I stayed the reviewable decision pending the hearing of this application, I have reached the conclusion that, subject to the applicant giving to both the Tribunal and the respondent appropriate undertakings with respect to the manner in which his work will be supervised in the interim, my discretion ought be exercised in favour of the applicant’s application for a stay of these proceedings. Specifically I refer to the following extract from my previous reasons:

“[13] As to the public interest, I accept the submission made by the Mr Donaldson, Senior Counsel for the applicant, that it is important to note that the respondent’s delegate did not make any finding under section 920A (1) (f) of the Corporations Act to the effect that she had reason to believe that the applicant would not comply with a financial services law in the future.
[14] Given that, and given the applicant has no history of any prior breach of a financial services law, I accept that this is not a case in which the conduct which the respondent’s delegate found on the evidence gives rise to any immediate risk to persons who might deal with the applicant and that there is no evidence that the public at large or financial markets generally would be imperilled if the stay were granted.
[15] I also note in this regard that, in the delegate’s decision, it was accepted that the applicant did not personally benefit from the conduct in question.”

60. During the course of the hearing the applicant, through Mr Donaldson, proffered the form of undertaking that had previously proffered to the respondent. Similarly, the respondent, through Mr Quinlan, identified what it considered to be the appropriate form of undertaking which should be required of the applicant should the Tribunal ultimately decide to stay the further hearing of this application.

61. Generally speaking, Mr Donaldson on behalf of the applicant accepted that none of the additional matters which the respondent wanted the applicant to undertake appeared unreasonable, but he was not in the position at the time to advise whether or not certain of them were matters which the applicant would in fact be able to procure. In essence, it was not a matter that could be progressed on the day of the hearing.

62. I foreshadowed to the parties that, in the event I was minded to grant a stay, I would invite the parties to endeavour to agree on the terms of the undertaking to be given by the applicant. That is indeed the manner in which I intend to proceed.

63. For the purpose of these Reasons it is sufficient to state that the stay which I will grant shall be conditional upon the applicant providing to the Tribunal and the respondent an undertaking in terms acceptable to the Tribunal to do or refrain from doing all matters which the Tribunal considers to be practicable with a view to ensuring that, during the stay, the applicant’s work as a financial adviser is the subject close supervision by a suitably qualified person (to be named in the undertaking as the person who will provide the supervision) with regular and frequent reporting to be provided by the applicant to the supervisor and by the supervisor to the respondent. In my opinion, that is required in order to properly protect the public interest during what may turn out to be a significant period of time.

DECISION

64. It was submitted on behalf of the applicant that, if I were to reach the conclusions I have, the appropriate result is for the reviewable decision to be set aside.

65. I do not accept that submission.

66. Although part of the reviewable decision included a decision not to stay the proceedings before the delegate, the substantive decision which is the subject of this application is the banning order made under the Corporations Act.

67. The Tribunal’s function is not to embark upon an administrative review of the respondent’s conduct or its decision making process. The Tribunal’s function is to carry out a merit-based review of the substantive decision made by the respondent and based on the evidence adduced before the Tribunal.

68. In essence, the Tribunal now stands in the shoes of the respondent’s delegate. The Tribunal has concluded that it ought not presently proceed with the merit-based review of the banning order. That, however, provides no reason to warrant the reviewable decision being set aside. The Tribunal would be abdicating its legislative duty if it were to do that.

69. The appropriate result therefore is for the further hearing of this application by the Tribunal to be stayed, until further order, pending a decision of the Commonwealth DPP as to whether to initiate criminal proceedings against the applicant and, if so initiated, the conclusion of those proceedings.

70. The Tribunal also notes that there may be a need for further directions to be made, including with respect to variations to the orders previously made by the Tribunal pursuant to section 41(2) of the AAT Act. This is because those orders were made on the basis that this application would proceed to a hearing and determination in short order. As a result of a change of position of the applicant (by the applicant subsequently seeking to have the further hearing stayed) it may be that the respondent may seek to have the Tribunal review the terms of those orders. I express no view as to what the result of any such review may be, other than to note that, as a consequence of what has occurred, liberty must be given to the respondent to apply to the Tribunal, should it wish to do so, in this respect.

71. I therefore propose to make the following orders:

1. Subject to 2, 3 and below, the further hearing of this application is hereby stayed until further order.
2. Within 28 days, the applicant must provide, to both the Tribunal and the respondent, an undertaking in terms acceptable to the Tribunal as to the manner in which the applicant will provide any financial services during the period of the stay.
3. Within 21 days the parties are to lodge with the Tribunal an Agreed Minute of Proposed Undertaking, or, failing agreement, Minutes of Proposed Undertaking contended for by each party.
4. The further hearing of this matter listed for 20 July 2009 is hereby vacated
5. The parties have liberty to apply to the Tribunal for further directions (including with respect to the orders previously made by the Tribunal pursuant to section 41(2) of the AAT Act).

I certify that the 71 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S Penglis, Senior Member

Signed: ..(sgd) T Freeman.............

Associate

Date of Hearing 2 June 2009

Date of Decision 30 June 2009

Counsel for the Applicant G Donaldson SC

Solicitor for the Applicant Tottle Partners

Counsel for the Respondent P D Quinlan

Solicitor for the Respondent B Rassool, ASIC