Duncan and Companies Auditors and Liquidators Disciplinary Board and Australian Securities and Investments Commission (Joined Party) [2009] AATA 70; (2009) 107 ALD 167; (2009) 49 AAR 494 (5 February 2009)

Last Updated: 3 November 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 70

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N 2006/1658

GENERAL ADMINISTRATIVE DIVISION		)
	Re		ADRIAN DUNCAN

Applicant

And

COMPANIES AUDITORS AND LIQUIDATORS DISCIPLINARY BOARD

Respondent

AUSTRALIAN SECURITIES

AND INVESTMENTS COMMISSON

Joined Party

INTERLOCUTORY DECISION

Tribunal

Mr P W Taylor SC, Senior Member

Date 5 February 2009

Place Sydney

Decision

It is not appropriate to make any order confining the Applicant to the admissions contained in the Agreed Statement of Facts used by the parties to conduct the hearing before the Companies Auditors and Liquidators Disciplinary Board. The Applicant does not require the leave of the Tribunal to resile from the facts agreed upon in that document.

...................[sgd]....................
Mr P W Taylor SC
Senior Member

CATCHWORDS

CORPORATIONS LAW – suspension of liquidator’s registration – whether applicant may resile from previously agreed upon facts put before the respondent – applicant does not require Tribunal’s leave to depart from previously agreed upon facts – nature of factual agreement – applicant not required to adhere to factual agreement – no order made to confine applicant to factual agreement

Administrative Appeals Tribunal Act 1975 – Sections 2A, 25, 43

Peacock v Repatriation Commission [2007] FCAFC 156; (2007) 161 FCR 256

REASONS FOR DECISION

5 February 2009

Mr P W Taylor SC, Senior Member

1. On 20 November 2006 the Companies Auditors and Liquidators Disciplinary Board (“the CALDB”) ordered Mr Duncan’s registration as a liquidator be suspended for a period of three months. The order was made under s 1292(2) of the Corporations Act 2001.
2. The Australian Securities and Investments Commission (“ASIC”) and Mr Duncan conducted the CALDB hearing substantially on the basis of an Agreed Statement of Facts. Mr Duncan gave, and was cross examined upon, some additional evidence. But the CALDB correctly attributed to the parties, and accepted, a submission that there was no significant factual dispute and that the Board could not rely on Mr Duncan’s evidence to contradict matters contained in the Agreed Statement of Facts.
3. Mr Duncan lodged his review application on 30 November 2006. After some delay (the reasons for which are presently immaterial) ASIC filed its Statement of Facts and Contentions on 10 April 2008. ASIC’s statement repeated the substance of the facts agreed in the CALDB proceedings. Mr Duncan filed a responsive Statement of Facts and Contentions on 30 June 2008, and a hearing certificate.
4. Mr Duncan’s 30 June 2008 SOFAC involved a point by point response to ASIC’s 10 April 2008 Statement of Facts and Contentions. Mr Duncan’s responses departed from many matters contained in the Agreed Statement of Facts provided to the CALDB. Subsequently, in response to ASIC’s objection to that departure, and at the Tribunal’s direction, on 23 October 2008 Mr Duncan filed a further Abbreviated Statement of Facts and Contentions (“the Abbreviated SOFAC”). The Abbreviated SOFAC highlights the matters Mr Duncan says are not agreed for the purpose of the review proceedings. The document differentiates between the previously agreed matters Mr Duncan contends are irrelevant, and those he contends are inaccurate. Mr Duncan does not press any argument in relation to the matters he contends are irrelevant. He is content, without formally conceding either relevance or materiality, for the Tribunal to regard those matters as agreed in fact. Mr Duncan does contend that the other matters he disputes are to be determined in the review proceedings without subservience to the agreement provided to the CALDB.
5. The parties’ contentions about the significance of the Agreed Statement of Facts they put before the CALDB are diametrically opposed. Mr Duncan recognises that the Agreed Statement of Facts is contained in documents to which s 37 of the Administrative Appeals Tribunal Act 1975 (“the AAT Act”) applies. Those documents are at least potentially relevant to the review proceedings and may ultimately form part of the evidence before the Tribunal. However, they evidence an agreement or admission that was made only in the CALDB proceedings. No similar agreement has been made in the review proceedings.
6. Mr Duncan also contends that, in any event, the Tribunal must exercise its review powers and cannot abandon its function to the parties’ prior agreement. Mr Duncan accepts that parties’ agreement about factual matters may relevantly inform the proper exercise of the Tribunal’s review function. But he says the objective information would, in the present case, require the Tribunal to determine the contentious matters rather than simply act on the parties’ prior agreement before the CALDB.
7. On the other hand, ASIC contends the Agreed Statement of Facts constituted a formal admission by Mr Duncan in the CALDB proceedings. ASIC contends Mr Duncan cannot now withdraw from that admission, and cannot adduce contrary evidence in the review proceedings, without the Tribunal’s leave. ASIC further contends that the Tribunal should refuse leave for two reasons. The first reason is that Mr Duncan has conspicuously failed to provide an adequate explanation for the factual contest foreshadowed by withdrawal of the admission. The second reason ASIC relies on to justify refusal of leave is that it would be prejudiced in the review proceedings. That prejudice is said to lie in the likelihood that it will be required to adduce further evidence relevant to the previously agreed matters. The prejudice partly lies in the risk of wasted costs in relation to expert evidence it has already obtained, and which was based on those matters. It also partly lies in the further delay that the apprehended factual contest will necessitate before the review proceedings can be heard.

THE NATURE OF THE ORIGINAL FACTUAL AGREEMENT

8. The Agreed Statement of Facts provided to the CALDB described the relationship between various entities including:
   

8.1 Knights Insolvency Administration (“Knights”) - an insolvency practice that operated in Brisbane, Melbourne and Sydney at various times between 1994 and February 2003;

8.2 Stokie Pty Ltd, Knights NSW Pty Ltd, Knights (Victoria) Pty Ltd - at various times service companies for one or more of the Brisbane, Sydney and Melbourne practices;

8.3 Knights Insolvency Administration Ltd (“KIAL”) - an unlisted public company to which the insolvency practices were transferred in about February 2003;

8.4 Mr Duncan (a registered liquidator, originally employed by Knights Brisbane practice, a Director of the Sydney and Melbourne service companies, and later a director of KIAL);

8.5 Fox Symes and Associates Pty Ltd (“FSA”) - a financial adviser that, from about February 2000, referred companies in financial difficulty to Knights’ Sydney and Brisbane practices, and was paid for those referrals;

8.6 10 companies FSA referred to Knights and of which Mr Duncan was appointed administrator;

8.7 Innovative Allied Solutions Pty Ltd (“IAS”) - a company that was paid fees for referrals and hired employees to Knights for insolvency work. IAS existed only between 15 March 2000 and 18 February 2002 but its sole director and shareholder was also a director of FSA.

THE SUBSTANCE OF THE CALDB PROCEEDINGS AND DECISION

9. One of the agreed facts in the Statement provided to the CALDB was that Mr Duncan did not disclose to creditors and directors of the relevant companies in administration either the referral fees or that some of the administration work would be done by persons employed by FSA and/or IAS. The CALDB found that the relationship between Mr Duncan, FSA and IAS involved a conflict of interest. The CALDB found that Mr Duncan had accepted appointments as a company administrator without properly disclosing the possibility of a conflict of interest. The CALDB accepted Mr Duncan’s evidence that he had considered the possibility of conflict, and had concluded that no disclosure was required. However, the CALDB found that Mr Duncan’s view “was not reasonably open to him” and that the correct view, requiring disclosure, should have been obvious to him.

THE SUBSTANCE OF THE PROPOSED FACTUAL “CONTEST”

10. Many of the basic details in the Agreed Statement of Facts remain apparently uncontentious. These include the propositions that (i) FSA did refer insolvency work to Knights and was paid a fee for the referrals (the Abbreviated SOFAC, paragraph 23), (ii) Knights paid IAS’s invoiced fees for insolvency work, and perhaps also for referrals (the Abbreviated SOFAC, paragraphs 24, 36 and 37).
11. The matters contained in the Agreed Statement of Facts are sometimes partly repetitive and sometimes partly overlapping. That appearance of repetition, or at least overlap, makes it difficult to summarise the contest sought to be advanced by Mr Duncan - at least as it is expressed in the Abbreviated SOFAC. When that document is read with Mr Duncan’s 30 June 2008 SOFAC, the proposed contest appears to fall into six main areas. These are:

11.1 whether FSA employees were seconded to Knights and whether FSA charged Knights a fee percentage for referrals (the Abbreviated SOFAC, paragraphs 22 and 23);

11.2 the precise details of the relationship between IAS and Knights including, in particular, whether IAS was set up for the purpose of providing subcontract services for referred insolvency work (the Abbreviated SOFAC, paragraph 39), the precise nature and proper characterisation of the “secondment” (30 June 2008 Statement, paragraph 24) and whether IAS charged Knights a fee percentage for that referral (the Abbreviated SOFAC, paragraphs 29(ii), 29(iv) 29(vi), 30 and 31 and compare paragraphs 36 and 37);

11.3 whether Duncan had been appointed administrator of 10 specified companies referred by FSA and accepted those appointments when he “knew or believed” that Knights had an arrangement with IAS to hire out its employees to do insolvency work relating to the referred companies (the Abbreviated SOFAC, paragraphs 38, 42, 43 and 46);

11.4 whether Duncan disclosed to the directors of the referred client companies either Knights’ payments to FSA or the fact that FSA employees would do some of the insolvency work (the Abbreviated SOFAC, paragraph 27);

11.5 whether Mr Duncan considered the potential for conflict by engaging IAS / FSA employees and positively concluded that there were sufficient safeguards to remove the possibility of conflict (the Abbreviated SOFAC, paragraph 47);

11.6 whether IAS / FSA provided any financial advice, apart from the mere referral, to companies they referred to Knights for insolvency work (contrast the Abbreviated SOFAC paragraphs 20 and 30 June 2008 Statement, paragraphs 20, 26, 44).

12. There are some aspects of the proposed contest that appear to involve inconsistency with uncontested matters. An example of this is the contrast between the contested assertion that IAS subcontracted its employees to Knights to carry out insolvency work (see Abbreviated SOFAC, paragraph 21) and the agreements that Knights paid IAS amounts invoiced for sub contract insolvency work and that two of IAS’ employees were subsequently employed by Knights in June 2000 (paragraphs 24 and 29(i) and (ii)).
13. There are other respects in which the proposed contest seems to go to matters of detail rather than substance. This is particularly the case in relation to the proposed contest that after October 2000 Knights paid IAS less than the amount IAS claimed (paragraph 33). It is likely to also be the case in relation to the proposed contest that by October 2000 IAS charged, and substantially received from, Knights specific sums representing a percentage of fees earned (paragraphs 29 (iv), (vi) (vii), 30 and 31). It may also apply to the proposed contest that Knights paid FSA for insolvency work (as distinct from referrals) as at 31 October 2000 (paragraph 25). Despite the contest about the amounts involved, and the precise character of various payments, Mr Duncan does not seem to dispute that IAS and FSA were in fact paid a commission for referrals: (see paragraphs 25 and 29(v)). It may be that the intended dispute also relates to the precise basis for the calculation of a referral fee (whether it was a particular percentage of Knights’ fees) rather than the basic fact that some such referral fee was paid.

THE MATERIALITY OF THE FACTUAL DISPUTE TO THE CALDB DECISION / THE REVIEW PROCEEDINGS

14. ASIC contends the significant contest now proposed by Mr Duncan is directly inconsistent with the CALDB’s critical findings and specifically contradicts matters explicitly agreed in the Agreed Statement of Facts. This is certainly true of each of the contests proposed in paragraphs 11.4 and 11.5, above. It is substantially true of the contest proposed in paragraph 11.6 - although there is arguably some imprecision in the Agreed Statement of Facts about the actual content of FSA’s financial advice to the referred companies. In the case of the contests proposed in paragraphs 11.2 and 11.3, it is true that they contradict the contents of the Agreed Statement of Facts. It is less clear that they contradict the CALDB’s findings - a matter to which I shall return.
15. ASIC further complains that Mr Duncan has not given any proper reason for seeking to contest matters that he had agreed in the CALDB proceedings. There is some justification for ASIC’s complaint. Mr Duncan supported his position with a short affidavit. In it he said the main purpose of the Agreed Statement of Facts was to minimise the cost and expense of the CALDB proceedings. He said it had been prepared with the best of intentions “but in the process matters which at the time I thought to be of minor consequence assumed greater importance at the CALDB hearing” and in the CALDB’s determination and orders. He claimed to have realised that “the ASF was factually incorrect in a number of important respects” and if permitted to stand would result in significant prejudice. Mr Duncan did not further elaborate in his affidavit the reason for the supposed errors in the Agreed Statement of Facts. Neither did his affidavit even specifically identify either the supposed errors or their importance. Mr Duncan’s 30 June 2008 responsive Statement is rather more discursive, and does more specifically explain the nature of the proposed contest, at least in relation to his contention that FSA / IAS did not really provide ongoing financial advice to the referred companies. But this more discursive indication does not include any explanation for the arguably contrary admission in the Agreed Statement of Facts.
16. It is far from apparent to me that some of the matters Mr Duncan now proposes to contest either involve error in the original Agreed Statement of Facts or that any supposed error is in fact likely to be material to the review proceedings. My doubt on this score is best illustrated by the contests proposed in paragraphs 11.4 and 11.5, above.
17. The contest suggested in paragraph 11.4 seems to involve a positive assertion that Mr Duncan did disclose his relationship with FSA (the engagement of FSA employees and the payment of referral fees) to the directors of the companies in administration. If this was so, it is difficult to understand why Mr Duncan agreed to the contrary proposition in the Agreed Statement of Facts. A conceivable intellectual possibility, though not one supported by any direct evidence, is that he considered it immaterial to assert disclosure to directors when he was prepared to concede an absence of disclosure to the creditors of the company in administration. But even that intellectual possibility seems to be foreclosed by the evidence Mr Duncan apparently gave at the CALDB hearing.
18. Mr Duncan’s evidence, and the submissions made on his behalf, are referred to on page 7 (paragraph 19(e)) of the CALDB Orders of 20 November 2006 and pages 22 and 25 (paragraphs 6.4(i) & 6.5(c)) of the CALDB’s 15 August 2006 Reasons for Determination. The thrust of this evidence, and the submission, was that Mr Duncan did not consider that there was any potential or actual conflict and that disclosure to the directors was immaterial (because it might reasonably be supposed they would have consented to the referral and staffing arrangement with FSA / IAS in any event. The fact that this was the position Mr Duncan took in the CALDB proceedings seems difficult to reconcile with any genuine factual error about the absence of disclosure to the directors of the companies in administration. But, and even more importantly, the CALDB’s reasons make clear that it regarded the absence of disclosure to the creditors - a fact that Mr Duncan does not contest - as the real gravamen of the complaint against Mr Duncan. This is readily apparent from page 7 (paragraph 19(e)) of the CALDB Orders of 20 November 2006).
19. The contest suggested in paragraph 11.5 above, apparently suggesting that Mr Duncan did not turn his mind at all to the question of a conflict of interest, is quite difficult to reconcile with the explicitly contradictory evidence attributed to him in the CALDB Orders of 20 November 2006. There, in paragraph 20, the CALDB set out a passage from Mr Duncan’s evidence. In that passage Mr Duncan says he had considered the question of conflict of interest and specifically decided that the potential did not need to be disclosed to the creditors, because he did not consider that it had any bearing or impact on them. Given that evidence, and the paucity of Mr Duncan’s explanation for the proposed contest, I am far from persuaded that there is a real justification for contesting the proposition previously recorded in the Agreed Statement of Facts.

CAN AND SHOULD MR DUNCAN BE HELD TO HIS PRIOR FACTUAL AGREEMENT

20. In contrast to the reservations I have just expressed, the contest proposed in paragraph 11.6 above, disputing the actual content of FSA’s activities as a “financial adviser”, is potentially very material to the CALDB’s conflict of interest findings against Mr Duncan. But if, as he apparently suggests, the admissions contained in the Agreed Statement of Facts were erroneous, he has not condescended to provide any real explanation of how the error occurred.
21. Given the position that emerges from the CALDB’s Orders and Reasons in relation to the contest proposed in paragraphs 11.4 and 11.5 above, and the absence of any real explanation from Mr Duncan, there is something to be said for restricting the review proceedings in this Tribunal to the factual position Mr Duncan previously agreed. However the ultimate justification for taking such a course depends substantially on two further considerations. The first is the true status and effect of the Agreed Statement of Facts in the CALDB proceedings. The second is the nature of this Tribunal’s review function given, on the one hand, its task of reaching the correct or preferable decision and, on the other, its power to limit the scope of the factual issues to be determined in the review proceedings: see the AAT Act ss 2A & 25(4A).
22. The first of these considerations takes me back to the contest proposed in paragraphs 11.2 and 11.3 above. The paragraphs of the Agreed Statement of Facts to which these proposed contests refer are rather notable for their imprecision and internal inconsistency. This was the subject of elaborate comment by the CALDB in its 15 August 2006 Reasons for Determination. The CALDB noted the fact of many inconsistencies in parts of the Agreed Statement of Facts and, in paragraph 5.2, gave specific examples. The CALDB confessed to difficulty in being able to summarise the relevant evidence and submissions. In paragraph 5.3 the Board observed that it was not possible “to establish the facts in a way which is entirely consistent with all the evidence and submissions”. The Board went on to record its belief that the Agreed Statement of Facts contained “certain irreconcilable inconsistencies” about the relationship between FSA and IAS and the precise details of the various payments to which it referred. In paragraphs 5.4, 5.6 and 5.10 the CALDB expressed the view that it was not necessary to draw precise distinctions between the various entities involved and that it was sufficient to “look at the substance of what happened” in the dealings between them.
23. The CALDB’s various complaints about the imprecision and inconsistency evident in the Agreed Statement of Facts contribute to an impression that the Board did not proceed merely on the basis of adhering to that document as if it was a formal admission that restricted the proper scope of its own decision making function. That impression is further contributed to by the fact that the CALDB did obtain specific evidence from Mr Duncan. That evidence related to whether or not he disclosed the referral and fee arrangements with FSA and IAS, and the reasons for the absence of disclosure. The CALDB stated that since Mr Duncan did give evidence, it considered itself entitled to accept that evidence, and draw inferences from it provided doing so did not “contradict an agreed fact”. The CALDB also recorded the parties’ agreement to that course: see paragraph 2.5 of the 15 August 2006 Reasons for Determination.
24. Despite that declared deference to the Agreed Statement of Facts, later parts of the Reasons for Determination suggest that the CALDB was alert to reach its own considered findings on many factual matters. This is particularly apparent from paragraphs 6.2 and 6.3 of the Reasons for Determination. In those paragraphs the CALDB not only recorded the effect of some parts of the Agreed Statement of Facts, but it also went on to review substantial parts of the primary evidence. In that review the CALDB did not merely content itself with the bland inference (available from paragraphs 21 and 27 of the Agreed Statement of Facts) that Duncan had intended to engage particular FSA / IAS employees on administration work those entities referred. Instead, the Board reviewed the evidence for itself and, on the basis of that review, concluded (i) that there was no evidence that one particular FSA / IAS employee had worked on any of the referred administrations and (ii) that the evidence amply justified a finding consistent with the Agreed Statement of Facts in relation to another specific employee: see Reasons for Determination paragraphs 6.3(g) & 6.3(h)(v) & 6.3(i).
25. The CALDB’s Reasons for Determination, with their apparently careful consideration of both the Agreed Statement of Facts and the underlying evidence, leave me with the impression that the CALDB did not in fact approach its decision making function on the basis that its factual findings were totally constrained by the Agreed Statement of Facts. Rather the Board seems to have paid lively attention to satisfying itself that the factual findings it regarded as critical to its ultimate decision were consistent with the underlying evidence. Indeed, the impression I have formed is that the Agreed Statement of Facts was more in the nature of an agreement by the parties about the conclusions that could properly be drawn from the evidence tendered to the CALDB, than an agreement which operated as a formal admission and determined the scope of the Board’s factual enquiry.
26. This takes me to the second of the considerations referred to in paragraph 21 above - the Tribunal’s review function. ASIC conceded the appropriateness of allowing Mr Duncan to resile from admissions that had been wrongly made. This, entirely reasonable, submission implicitly acknowledges not only the importance of the Tribunal’s particular function - to reach the correct or preferable decision - but also the tension between that function and confining the review process to the parties agreed facts. Necessarily that tension is even greater in the circumstances of the present case where one party seeks to resile from, and the other party seeks to rely on, a prior agreement.
27. As ASIC points out, in ordinary litigation court procedures typically involve pleading rules that permit, and sometimes effectively require, formal admissions. Formal admissions of that kind define the issues for the court’s adjudication and provide a criterion for limiting the scope of the evidence adduced. These formal admissions cannot be unilaterally withdrawn and require the court’s leave. The discretion to grant leave will not be exercised unless the court is affirmatively satisfied that the admission has been “wrongly” made - a requirement that can be met either by evidence of demonstrable error or, in some circumstances, by satisfactory evidence of probable error and explanation that the admission was made without properly informed deliberation.
28. There is no formal mechanism for factual admissions in the Tribunal’s proceedings. Nor is there any requirement for leave to withdraw any admission. Furthermore the force of any analogy with ordinary curial leave requirements is diminished by the consideration that the Agreed Statement of Facts in the present case relates to the proceedings before the CALDB. The agreement and admissions which it contains were not made for the purpose of the Tribunal’s review proceedings. Those review proceedings cannot be regarded as relevantly analogous to appeal proceedings in ordinary curial litigation. In litigation of that kind the appeal jurisdiction is confined to demonstrable error in the trial judgment and the appeal grounds are, with rare exceptions, confined both to the trial evidence and to points taken at the trial. This Tribunal’s review functions are, by virtue of the powers contained in s 43 of the AAT Act, clearly quite different and more extensive. Indeed, there is authority for the view that even an explicit concession by a party to Tribunal proceedings cannot supplant the Tribunal’s function to reach the correct or preferable decision: Peacock v Repatriation Commission [2007] FCAFC 156; (2007) 161 FCR 256 at [23]. In all these circumstances there is no proper basis on which Mr Duncan could be subjected to a formal leave requirement to justify departing from the Agreed Statement of Facts provided to the CALDB.
29. Although formal admissions in curial proceedings are a matter for the voluntary decision of individual parties, the purpose of the formal admission procedures is to encourage issues being confined to matters really capable of genuine dispute. The Tribunal’s power under s 25(4A) of the AAT Act and the objective mandated by s 2A of the AAT Act, are directed towards the same end. At a level of generality the Tribunal should be astute to confine issues to those that are genuinely contentious, so as to ensure that the review proceedings are “fair, just, economical ... and quick”. However at the level of particularity required in individual review proceedings there is both potential tension between the cumulative requirements of fairness, justice and expedition, and practical difficulty in determining in advance that particular issues are either sufficiently immaterial, or so incapable of genuine controversy, as to justify a limiting order being made under s 25(4A) of the AAT Act.
30. In the present case there are some proposed contentions that do not seem to involve genuine controversy, at least in the light of the evidence that Mr Duncan gave at the CALDB hearing and the lack of particularity in his brief affidavit in these proceedings. (I am referring specifically to the matters referred to in paragraphs 11.4 and 11.5 above.) But there are also some respects in which the proposed contentions seem to involve matters of inference, characterisation and consistency, and relate to matters that were remarked on by the CALDB itself as difficulties with the Agreed Statement of Issues. (I am referring here to some of the matters in paragraphs 11.2 and 11.3 above.) Furthermore, as I remarked in paragraph 25 above, I have formed the impression, from the way in which the CALDB dealt with the matter, that the Agreed Statement of Facts was proffered substantially as the parties’ agreed position about the effect of the evidence that was put to the Board, rather than as a substitute for probative evidence.
31. In these circumstances I do not consider it is prudent or appropriate to give any direction, or make any order, that would have the formal effect of requiring Mr Duncan to adhere to the various admissions contained in the Agreed Statement of Facts provided to the CALDB. In taking that course I am not at all satisfied that Mr Duncan has provided a sufficient explanation for seeking to depart from at least some of the admissions. However, the determinative consideration is not so much the absence of explanation for his apparent change of mind as whether or not I am satisfied that the matters to which the admissions relate are really beyond relevant and genuine controversy. The particular difficulty I have in coming to that satisfaction relates to the CALDB’s explicit criticism of parts of the Agreed Statement of Facts and the fact that, in many respects the CALDB seems to have been careful to reach its own satisfaction based on the underlying evidence. And although the CALDB’s criticisms of the Agreed Statement of Facts do not relate to the matters involved in the contentions proposed in paragraphs 11.4 and 11.5 above, I am reluctant, at this stage of the review proceedings, to engage in a process of nice discrimination between the various proposed contentions. I consider it more prudent to recognise the possibility that proper consideration of the contentions proposed summarised above in paragraphs 11.4 and 11.5, and especially in paragraph 11.6, cannot be entirely divorced from all of the other matters in the Agreed Statement of Facts. I am encouraged in that course by the CALDB’s apparently justified criticisms of the inconsistencies and imprecision of parts of that statement.
32. In refusing to make any order under s 25(4A) of the AAT Act, and in refusing to impose any leave requirement for Mr Duncan to depart from the Agreed Statement of Facts, I have considered ASIC’s submissions about potential prejudice (as outlined in paragraph 7 above). I am not satisfied that ASIC faces a material risk of prejudice that is sufficient to justify confining Mr Duncan to the admissions he made in the CALDB hearing. In relation to the contentions proposed in paragraphs 11.4 and 11.5 Mr Duncan will inevitably be confronted by the evidence he gave in the CALDB proceedings, as well as the fact of the admission contained in the Agreed Statement of Facts. At least in the absence of any persuasive explanation from Mr Duncan for his apparent change of mind on those matters, and given ASIC’s stance that it would not object to withdrawal of any admission if proper cause was shown, it does not seem to me realistic to contemplate that ASIC could be prejudiced in any real respect.
33. In the case of the contention proposed in paragraph 11.6, I am impressed by the arguable ambiguity of the “financial advice” functions of FSA, at least as they are described in paragraph 20 of the Abbreviated Statement. Although Mr Duncan’s previous admission, of knowledge that FSA was giving ongoing financial advice to companies to which he had been appointed a director, appears unambiguous, I am troubled both about the generality of the concept of “financial advice” and about the concept of financial advice given to the directors of a company to which an administrator had been appointed. I consider that the proper exercise of the review function is likely to require information about the actual content of any such advice. The conflict to which it supposedly gives rise may depend on the actual content, rather than the adjectival characterisation, of FSA’s advice.
34. Slightly different considerations apply to the other proposed contentions. My impression of most of these is that they appear to go to matters of detail and consistency in the interpretation of underlying evidence. Any clarification of those details, particularly in the light of the CALDB’s criticisms of the Agreed Statement of Facts, is not a matter involving significant relevant prejudice to ASIC.
35. ASIC’s final submission in relation to prejudice is that permitting Mr Duncan to resile from his previous admissions is likely to expose it to wasted costs in relation to its preparation and evidence to date. There was a suggested risk of wasted costs in relation to expert evidence, which ASIC said it had commissioned in March 2008, based on the Statement of Agreed Facts. As a general proposition it is proper to recognise that permitting a party to resile from prior admissions may well affect the preparations undertaken by other parties and may, depending on the timing and significance of the change, result in wasted costs. Such a risk is certainly a relevant consideration, in view of the Tribunal’s mandated objective of providing an economical review mechanism: AAT Act s 2A. But I do not consider that there is such a material risk involved in the contentions now proposed by Mr Duncan. The proposed contentions do not dispute the fact (as distinct from the precise details) that FSA and IAS were paid fees related to both referrals to Knights and sub contract work. Neither do they dispute that there was no disclosure to relevant creditors. And whilst there appear to be proposed contentions about both the particular companies to which Mr Duncan was appointed administrator and the precise character of the fees paid to FSA / IAS, those details appear to be matters of subsidiary detail and are inherently likely to be merely matters of the proper characterisation and effect of evidence that is already available.
36. I conceive that the proposed contention ASIC may be most concerned by is that proposed in paragraph 11.6 - the content of FSA’s ongoing “financial advice” to companies to which Mr Duncan had been appointed as administrator. Mr Duncan’s 30 June 2008 SOFAC contends ASIC has no evidence to establish the content of any such advice. But the absence of relevant evidence would not amount to relevant prejudice unless, perhaps, previously available evidence had been lost, or been materially diminished in quality, as a consequence of the lapse of time since the prior admission. There was no evidence to suggest, and no contention from ASIC, that this was a realistic possibility.
37. My views about the unlikelihood of relevant material prejudice to ASIC are also influenced by what I consider to be appropriate for the further preparation of the review proceedings. In correspondence Mr Duncan’s legal advisers espoused the view that it was up to ASIC to adduce evidence to contradict the contentions he proposed in his 30 June 2008 responsive statement. ASIC may have apprehended from this that it would be required to present its evidence first, and that it would be confronted with a practical obligation to establish, without any ability to rely on the Agreed Statement of Facts, the content of FSA’s financial advice, as well as other matters involved in Mr Duncan’s proposed contentions. ASIC may have been concerned that if it did so it would have to take a conservative course in determining the precise intent and effect of the proposed contentions. Such a conservative course may have inclined ASIC to take a much more expansive view of the required and relevant evidence than was the case in the CALDB hearing.
38. As at present advised, I would not require ASIC to precede Mr Duncan in the preparation of its evidence. Neither would I encourage Mr Duncan and his legal advisers to assume that the 30 June 2008 SOFAC serves in any way to diminish whatever potential significance can otherwise properly be attributed to the admissions contained in the Agreed Statement of Facts. It is my preliminary view that the efficiency of the review process would be best served by requiring Mr Duncan first to complete the service of his evidence, or unequivocally confirm that his evidence is already complete. Imposing such a requirement, including the subsequent service of any additional evidence by Mr Duncan, should clarify the nature of the real issues involved in the proposed contentions, and the scope of the evidence necessary for their determination. That course should minimise any risk of prejudice to ASIC.

DECISION

39. I conclude with a point of clarification. At the hearing there was some uncertainty between the parties about the precise matter to be determined. ASIC’s apparently preferred view was that Mr Duncan was an applicant for leave to withdraw his prior admissions in the Agreed Statement of Facts. Mr Duncan’s apparently preferred view was that ASIC was an Applicant for an order limiting the issues to the admissions contained in that Statement of Facts. For the reasons I have set out earlier, I do not consider Mr Duncan requires any leave, or that there is any mechanism for imposing a leave requirement. Neither do I consider it appropriate to make any order confining Mr Duncan to the admissions contained in the Agreed Statement of Facts. However, I point out that my refusal to make such an order in no way detracts either from the potential relevance of the Agreed Statement of Facts to the review proceedings, or from the weight that might ultimately be accorded to the admissions ASIC contends it contains.
    

I certify that the 39 preceding paragraphs are a true copy of the reasons for the decision herein of Mr P W Taylor SC, Senior Member.

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

Associate

Date of Hearing 18 December 2008

Date of Decision 5 February 2009

Counsel for the Applicant Mr J Baird

Solicitor for the Applicant NOT Lawyers

Counsel for the Respondent Mr G McNally SC

Solicitor for the Respondent Ms S Le Breton, ASIC