Rent to Own (Aust) Pty Ltd and Australian Securities and Investments Commission [2011] AATA 689 (6 October 2011)

Last Updated: 7 October 2011

[2011] AATA 689

Division	GENERAL ADMINISTRATIVE DIVISION
File Number	2011/2385
Re	Rent to Own (Aust) Pty Ltd
	APPLICANT
And	Australian Securities and Investments Commission
	RESPONDENT

DECISION

Tribunal	Justice Downes, President Deputy President P E Hack SC
Date	6 October 2011
Place	Brisbane

1. Decision set aside.

2. Substitute a decision that a licence be granted to Rent to Own limited to performing and enforcing contracts already made.

3. Remit the matter to the Australian Securities and Investments Commission to perfect the grant of the licence.

............................[sgd]............................................

Garry Downes

President

CATCHWORDS

CONSUMER CREDIT - Credit protection - finance brokers and credit providers - licensing - obligations of licensees – likelihood of contravening obligations – licence refused

ADMINISTRATIVE LAW - Nature of administrative decision-making - discretionary decision-making - the “preferable decision” - community standards

RELEVANT ACTS

Administrative Appeals Tribunal Act 1975 (Cth) s 2A

Consumer Credit (Queensland) Act 1994 (Qld)

National Consumer Credit Protection Act 2009 (Cth) ss 37, 45 and 47

CITATIONS

Donoghue v Stevenson [1932] UKHL 100; [1932] AC 562

Drake v Minister for Immigration [1979] AATA 179; (1979) 24 ALR 577

Drake v Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634

Mabo v Queensland [No. 2] [1992] HCA 23; (1992) 175 CLR 1

McKinnon and Department of Treasury [2004] AATA 1364; (2004) 86 ALD 138

McKinnon v Secretary, Department of Treasury (2006) 228 CLR 423

Miller v Miller [2006] UKHL 24; [2006] 2 AC 618

Onus v Aloca of Australia Ltd [1981] HCA 50; (1981) 149 CLR 27

Shi v Migration Agents Registration Authority [2008] HCA 31; (2008) 235 CLR 286

SECONDARY MATERIALS

A. Mason, 'Administrative Review: The Experience of the First Twelve Years' [1989] FedLawRw 3; (1989) 18 (3) Federal Law Review 122

Sir Anthony Mason, 'The Courts and Public Opinion' (2002) Winter Bar News 30

Sir Anthony Mason 'The Art of Judging’ (2008) 12 Southern Cross University Law Review 33

REASONS FOR DECISION

Tribunal	Justice Downes, President Deputy President P E Hack SC
Date	6 October 2011

SUMMARY

1. Robert Tapping is a director and the “controlling mind” (to use his own description) of Rent to Own (Aust) Pty. Ltd. He holds a similar position with Cash on Tap Pty Ltd, previously called Aussie Payday Loans Pty Ltd. The business of Rent to Own is financing the purchase of furniture and white goods from its own stores. The business of Cash on Tap is the provision of short term loans. Such loans are generally made at high interest.
2. Since 1 July 2011, when the relevant part of the National Consumer Credit Protection Act 2009 (Cth) began operation, it has been necessary for the operator of a business such as Rent to Own to have an Australian credit licence granted under the Act. Rent to Own has applied to the Tribunal for review of the Australian Securities and Investments Commission’s refusal to grant it a licence.
3. An Australian credit licence must be granted to an applicant if ASIC “has no reason to believe that the person is likely to contravene” certain obligations under the Act “and must not grant... a licence unless” it has no reason for that belief.
4. Rent to Own entered into a conduct deed with the Office of Fair Trading in Queensland on 25 January 2011 accepting that it had contravened interest rate provisions of the Consumer Credit (Queensland) Act 1994 (Qld) and agreeing to reduce amounts payable under open contracts and to provide redress of almost $130,000. On 16 July 2009 Aussie Payday Loans had signed a conduct deed acknowledging similar contraventions and agreeing to redress. Mr Tapping was a party to that deed. Aussie Payday Loans had also been prosecuted in the Queensland Magistrates Court with other contraventions of the Queensland Act and Code, substantially with respect to the same contracts. No conviction was recorded, but a penalty of $10,000 was imposed. When completing Rent to Own’s application for a credit licence Mr Tapping answered “no” to a question asking whether he had ever been “the subject of... proceedings or enforcement action... which were determined adversely”. In the documents he filed in this matter and in his evidence Mr Tapping generally maintained that he had done nothing wrong.
5. We do not have “no reason to believe that” Mr Tapping is likely to contravene the relevant obligations under the Act. Indeed, we are satisfied that there is reason to believe that he will not. Mr Tapping should be refused a credit licence other than to the extent that will enable him to perform existing contracts.

FURTHER FACTS

6. Prior to 2008 credit providers such as Rent to Own and Cash on Tap were not required to be licenced. There was no restriction on the interest rates they could charge.
7. On 31 July 2008 the Queensland Consumer Credit Code imposed a limit on interest in consumer credit transactions of 48% per annum. The Queensland Office of Fair Trading sent “Aussie Payday Loans” a letter giving notice of the changes on 24 June 2008. The salutation in the letter was “Dear Mr Tapping”. The Queensland legislation provided that the limit of 48% per annum was inclusive of “all credit fees and charges under the credit contract”.
8. By deed dated 16 July 2009 executed by Mr Tapping as sole director of Aussie Payday Loans and, separately, by him personally, both the company and Mr Tapping acknowledged contraventions of the Act in 28 cases which led to reimbursements of $7,998.25. The parties undertook “immediately to comply in all respects with the Act and the Code for all future credit contracts”.
9. The loans in question were generally short term. However, the actual cost to the borrower shown as an interest rate was as high as 3182.29% and mostly at least 500%. As a result of this investigation by the Office of Fair Trading persons who borrowed $300 to $500 were reimbursed sums averaging between $30 and $100.
10. In addition, proceedings were taken by the Office of Fair Trading in the Magistrates Court of Queensland. On 11 November 2009, the company admitted, in a statement of agreed facts filed in the proceedings, that it had entered into 8 contracts between August and October 2008 which contained three breaches in each contract relating to requirements for disclosures and warnings. The provisions had been in the Code since 1996. No conviction was recorded, but a penalty of $10,000 was imposed.
11. On 25 January 2011, after application had been made on behalf of Rent to Own for a credit licence, Rent to Own entered into a conduct deed with the Commonwealth Department of Employment, Economic Development and Innovation. Mr Tapping was not a party to the deed, but he signed the deed on behalf of the company. The deed acknowledged contraventions of the Queensland Consumer Code including charging excessive interest. The company undertook to reduce the amounts payable on open contracts by $44,932.93, to pay an additional $83,915.63 to borrowers and to pay $10,000 to the Department. Although the deed was made after the application for a licence was made, it related to events occurring prior to the application.
12. The amounts financed by the Rent to Own contracts were higher than the amounts financed by Aussie Payday Loans. The amounts were generally more than $1,000 and up to $6,000. Repayments made to individual borrowers were up to $3,000.
13. When applying for a credit licence Rent to Own was obliged to complete an application form. The form was completed by Mr Tapping on the internet. The form required a “Statement of Personal Information for Robert John Tapping”. It included the following and was completed as shown:

Names
Within the last 10 years, within Australia and/or overseas, have you ever carried on business under any name other than the name or names shown in this application?
Ο Yes ʘ No
Within the last 10 years, within Australia and/or overseas, have you ever been known by any name other than the name or names shown in this application?
Ο Yes ʘ No
Offences
Within the last 10 years, within Australia and/or overseas, have you ever been the subject of administrative, civil or criminal proceedings or enforcement action, which were determined adversely to you (including by you consenting to an order or direction, or giving an undertaking not to engage in unlawful or improper conduct) in any country?
Ο Yes ʘ No

14. ASIC criticised the first and third answers. The businesses Mr Tapping was associated with were conducted by companies. Accordingly, it was strictly correct for him to say that he had not carried on business under another name. Having regard to the second question, the two questions under “Names” could be understood simply to be seeking information about the use of aliases. The questions are badly drafted and ought to be redrafted so that they avoid ambiguity and recognise the distinction between a company and its shareholders. We will accordingly draw no adverse inference against Mr Tapping for his answer to the first question, even though a cautious person completing the form might have given a qualified yes and referred to Aussie Payday Loans. This might have been appropriate because the form of the question assumed, wrongly, that the applicant (Rent to Own) was a name under which Mr Tapping had carried on business which demonstrated that it did not recognise the distinction between a company and its shareholders.
15. The same cannot be said of Mr Tapping’s answer relating to offences. The answer to that question was plainly and unambiguously “yes”. Mr Tapping’s attempts to explain why he gave a false answer only made his position worse.
16. There was some disagreement between the parties as to the sequence and detail of events relating to the contraventions of the legislation. It seems that Rent to Own continued to breach the Code after Aussie Payday Loans entered into its conduct deed. There is a disagreement as to precisely how the question of whether Rent to Own needed to comply was raised. Mr Tapping suggests he raised it. Ms Melanie Spong, who dealt with Mr Tapping on behalf of ASIC, suggests that the matter was raised by ASIC. We do not think that this issue needs to be resolved, because the matter can be dealt with on the assumption that Mr Tapping is correct, without affecting the result.
17. What is important is that the self-confessed “controlling mind” of two significant businesses could have considered that the legislation might not apply to Rent to Own. It is to be remembered that, as the controlling mind of the businesses, Mr Tapping was dealing daily with the sale and financing of furniture and white goods. He was lending money. He must have been ordering goods and otherwise managing two significant businesses. He was undertaking a responsible role which imposed obligations on him to ensure that the businesses were being carried on lawfully in all respects. It was not put to Mr Tapping that he was not truthful. That is not ASIC’s case and we do not approach it on that basis. However, Mr Tapping was either substantially lacking in business acumen or careless to a significant extent in the way he managed his businesses, not to know that the finance operations of Rent to Own involved the provision of credit which would attract the provisions of the Code. Although this is obvious, it is confirmed by reference to a “Rent-To-Own Agreement” which refers prominently to the “amount financed” in at least two places. A large note on the document describes it as a “Consumer Credit Contract”.
18. To our minds the letter from the Office of Fair Trading of 24 June 2008 would inform any reasonably intelligent person that its terms would apply to the activities of Rent to Own as well as Aussie Payday Loans. Such a person would immediately take all necessary steps and seek any necessary advice from lawyers and accountants and not rely upon the regulators to bring matters to attention.
19. When questioned by ASIC before a decision was made not to grant him a licence Mr Tapping said this:

A bit of the background of the Fair – the 48 per cent cap as well, we – where we erred is – back in 2008, 1 August, that’s when they started the 48 per cent cap. We changed our model so we could come under that, but obviously our computer wasn’t lined up with what their computer was telling them was lined up, so we had to repay a number of customers and pay a fine and go to court.

20. When shown the written terms of an Aussie Payday Loans agreement, which referred to “an annual percentage rate of 50.068”, while giving evidence, Mr Tapping agreed that it was not necessary to go to computer programs to discover that there were contraventions.
21. In the material filed in these proceedings and in his evidence Mr Tapping appears to think it was appropriate to deflect emphasis from his own wrongdoing and to attempt to divert it to the regulators. Even in the witness box he was still saying that he had “done nothing wrong in the last 26 years”.

CONSIDERATION

22. The ultimate question for the Tribunal is whether it “has no reason to believe that [Rent to Own] is likely to contravene the obligations that will apply under s 47 if the licence is granted” (s 37(1)(b)). There might also be a question whether the Tribunal “has no reason to believe that [Rent to Own] is not a fit and proper person to engage in credit activities” (s 37(1)(c)). ASIC does not, however, rely on this provision and so we pass from it.
23. The obligations under s 47 include the following:

47 General conduct obligations of licensees
General conduct obligations

(1) A licensee must:

• (a) do all things necessary to ensure that the credit activities authorised by the licence are engaged in efficiently, honestly and fairly; and

...
(c) comply with the conditions on the licence; and
(d) comply with the credit legislation; and
...

24. ASIC relies on these obligations as the obligations to be tested under s 37(1)(c). ASIC relies on four matters:
    1. The contraventions of the legislation and a suggestion that they show a pattern of conduct.
    2. The absence of any real recognition of wrongdoing and the failure to introduce a strict system to ensure it will not reoccur.
    3. An attitude that it is as much for regulators to inform Mr Tapping and Rent to Own what needs to be done as it is for them to discover it and take steps to comply.
    4. The making of a false statement in the application.
25. We find that each of these complaints is made out. In particular, we consider that the making of numerous contracts, some of them containing multiple contraventions, through two companies, establishes a pattern of conduct. The question is, of course, whether that pattern will come to an end. We doubt if it will, particularly if Mr Tapping is now granted a licence, notwithstanding his continuing attitude and the lack of any evidence showing very thorough accounting and legal steps have been taken to show that it will not occur again. There was, to be fair to Mr Tapping, some evidence of expenditure on legal costs apparently directed to achieving compliance with the legislation, but there was no evidence, for example, from that legal practitioner to attest to the fact the Mr Tapping’s systems and processes do now comply with the legislation.
26. We think this is a clear case. However one views the tests in the legislation and however one views the facts we think the Tribunal cannot have “no reason to believe that [Rent to Own] is likely to contravene” each of the obligations relied upon.
27. We have no reason to believe that upon obtaining a licence Mr Tapping will institute strict practices and standards to ensure compliance. We do not think that imposing conditions on the licence is appropriate. In any event, Mr Tapping’s conduct is not to be narrowly confined to the particular matters dealt with in the conduct deeds. His failures to comply in one respect lead to a reasonable belief that he will fail in other respects. This is particularly so when one reasons from the combination of the four matters which we have found to be made out.
28. We accordingly find that the absence of “no reason to believe” which the Act requires relates to each of obligations in s 47(1)(a), (c) and (d). So far as (1)(a) is concerned, in the way that ASIC has presented the case, we confine our findings to ensuring the credit activities “are engaged in efficiently” rather than “honestly and fairly”. Although no contravention to date relates to conditions on a licence (there has previously been no requirement for a license) we consider that the test is made out to the requisite level because it is an obligation of the same type as the obligations that have been contravened in the past. The risk with respect to the obligation to comply with the credit legislation is, of course, the risk most clearly established.
29. For all these reasons Rent to Own ought not to be granted an Australian credit licence except, for reasons which appear below, to perform existing contracts.

THE NATURE OF DISCRETIONARY ADMINISTRATIVE DECISION-MAKING

30. This is a clear case. However it presents an opportunity for something to be said about the nature of the discretion which the Tribunal frequently exercises and how it should be exercised.
31. In Shi v Migration Agents Registration Authority [2008] HCA 31; (2008) 235 CLR 286 the High Court endorsed the oft repeated observation of Bowen CJ and Deane J in Drake v Minister for Immigration [1979] AATA 179; (1979) 24 ALR 577 at 589 that the question for the Tribunal is what is “the correct or preferable decision”. The well-known understanding of the phrase was explained by Gleeson CJ and Kirby J in McKinnon v Secretary, Department of Treasury (2006) 228 CLR 423 at 427 where they referred to “the correct or (in the case of discretionary decisions) the preferable one”.
32. Where the alternative obligation to arrive at “the preferable decision” arises, the Tribunal is exercising a general discretion. Such a discretion arises frequently in the Tribunal’s jurisdiction but it still does not arise in the bulk of cases. When the Tribunal is dealing with an employees’ compensation application, a veterans’ entitlement case, or a social security claim there is generally no discretion. The question is simply whether the Tribunal is satisfied that the claimed entitlement is made out. The task is to arrive at the correct decision. There is no general discretion. For such cases the matters we will deal with have no operation. The following remarks are confined to cases in which there is a general discretion – in which the task of the Tribunal is to arrive at the preferable decision. These are cases in which, for example, it can be said that the question for the Tribunal is whether the better (or preferable decision) is that a financial adviser should be banned or a visa should be cancelled. There will always be specific matters to be assessed and taken into account in these cases, but there will remain a judgment as to whether the balance ultimately tips one way or the other.
33. While the obligation of the Tribunal to arrive at the preferable decision in an appropriate case is repeated in very many decisions of the Federal Court and even more decisions of the Tribunal itself, very little has been said about how the preferable decision is to be arrived at; about what considerations should inform its determination.
34. The essential characteristic of a discretionary decision is that there will be alternatives which will be equally lawful. The decision chosen may not be the best decision, but the decision will have been made without error of law and will accordingly be final. That will be so even if an alternative which is not chosen is, in fact, the preferable decision, or, perhaps more accurately, the decision which another considers to be the preferable decision. That this is so serves to emphasise the importance of the selection of the preferable decision and the fundamental importance of addressing the right considerations in making the selection.
35. The present case is not one in which there is a general discretion to grant or refuse a licence. This is because the Act requires the granting of a licence to a person who satisfies the paragraphs of sub-s 37(1) and requires the refusal of a licence to someone who does not. There is no room for discretion once a determination has been made as to whether the paragraphs are satisfied.
36. It cannot be denied, however, that different persons may come to different conclusions as to whether the paragraphs do or do not apply. This is because, for some of the paragraphs, the determination depends upon the state of belief of ASIC and, on review, the Tribunal. Even so, there may technically be no discretion, because there can ultimately only be one correct state of belief. One has the difficult situation in which subjective considerations are involved, with the possibility that different decision-makers may come to different conclusions; but this does not alter the fact that the test is ultimately an objective test of whether there is, or is not, reason for the specified belief (see McKinnon and Department of Treasury [2004] AATA 1364; (2004) 86 ALD 138 at 142; upheld on appeal: (2006) 228 CLR 423).
37. The present legislation accordingly does not offer any general discretion to the decision-maker as to whether a licence may be granted. Having concluded that there is reason to believe that Rent to Own is likely to contravene obligations under s 47 of the Act that would seem to be an end of the matter.
38. The question has been raised in this case, however, whether a licence might be granted if the public interest can be adequately protected by the grant of a licence subject to conditions. In the absence of a verb such as “may grant” in the section conferring power this might, at first, be though to be problematic. However, s 45 of the Act authorises licences subject to conditions. One occasion for the imposition of a condition might be to ensure satisfaction of the obligations under s 47. Whether or not conditions should be imposed to achieve this object would plainly involve general discretionary decision-making. The best way such a discretion might be supported would be to say that in the presence of the conditions on the licence there would no longer be a reason to believe that the applicant is likely to contravene the obligations imposed by the Act.
39. However one arrives at the position that the decision-maker is authorised to address the protection of the public interest and what is required to achieve that, one thing is clear, and that is that such a process would involve a general discretion. The question whether there is reason to believe that a person is likely to contravene statutory obligations is replaced by the question whether adequate measures can be taken to protect the public from the risk. The ultimate question would be, what factors should be considered in determining what will adequately protect the public and by what standard or measure should these factors be assessed?
40. Although, to a greater or lesser extent, depending on the nature of the proceedings, the Administrative Appeals Tribunal conducts its determinations in a court like fashion, it is not a court. It does not exercise judicial power. It is part of the executive government of the Commonwealth of Australia. It is part of Australia’s federal government administration. It arrives at its decisions in a manner familiar in courts, but that is not to say that the matters guiding the decision-making process are the same as those guiding courts. Of course, the Tribunal must correctly determine what the law is and apply it correctly. However, outside this role, the nature and functions of the Tribunal are quite different to the usual functions of a court.
41. The Tribunal, in its determinations, must be informed by matters of good administration. It needs to be conscious that it is, for example, fulfilling for this case, the role of regulator in connection with the licensing of credit providers. The appropriate level of protection of the public is, of course, vital to this activity.
42. None of this is to deny the very important role of the Tribunal in ensuring that individual justice is done. One of the great advances in public administration which was achieved by the establishment of the Tribunal was the placing of emphasis on considerations of individual justice in administrative decision-making. This was emphasised in a speech made by Sir Anthony Mason in 1989 when he gave as one of the five differences in reasoning between primary administrative decision-makers and decision-makers in review proceedings, the following (A. Mason, ‘Administrative Review : The Experience of the First Twelve Years’ [1989] FedLawRw 3; (1989) 18(3) Federal Law Review 122 at 130):

Finally, he [the primary decision-maker] is inclined to subordinate the claims of justice of the individual to the more general demands of public policy and sometimes to adventitious political and bureaucratic pressures.

43. Ideals of individual justice do not, however, replace the demands of good administration.
44. Nor does focussing on the role of the Tribunal as an administrative decision-maker qualify the Tribunal’s power to depart from government policy: Drake v Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, 644-5. The ability of the Tribunal to depart from government policy in a particular case is closely associated with the importance of achieving individual justice. Individual justice will generally be achieved, however, by making the preferable decision – even when that decision does not accord with government policy.

THE PREFERABLE DECISION

45. Posing the question whether steps can be taken to adequately protect the public in the event of the grant of a licence or a decision not to cancel one raises directly the issue of where questions of individual justice take their place in administrative decision-making.
46. The statement that the imposition of conditions will adequately protect the public employs a deceptively simple proposition to disguise a number of complex matters. Two of them are very important. First, what role does seeking to compulsorily rehabilitate a licensee, who does not otherwise satisfy the test, by imposing conditions on a licence, have in the process of regulation. Secondly, if it is appropriate to consider granting a licence on conditions, what basis of evaluation is to be employed, in determining what conditions are adequate.
47. In our opinion there is little scope for the use of a regulatory role for rehabilitation. Having said that, there will be cases where circumstances will cause a decision-maker to opt for the alternative of the imposition of conditions or the acceptance of an undertaking as a basis for declining to cancel a licence of some kind. The central consideration remains, however, good regulation and good administration, not an overanxious desire to permit regulated activity wherever possible.
48. The second question is a very important one. It lies at the heart of all discretionary administrative decision-making. Little has been said about it. Decision-makers are apt to say that they are satisfied about a discretionary matter, for example, about whether conditions will adequately protect the public. They may offer “an opinion” or “view” as to what is adequate. The test, however, cannot be subjective. It cannot admit of idiosyncratic ideas. Evaluation in accordance with the decision-maker’s own personal standards or philosophy must not guide the determination.
49. It is important to remember the difference between court adjudication and administrative decision-making. Judges are not often called on to make decisions which require an evaluation of the consequence of a decision in terms of public interest. Their focus is more on questions of lawfulness of conduct. The power of administrative decision-makers, both within government and on review, is often a significant power. In terms it can exceed the powers of courts. The extent of the power implies that it must be exercised with care. Administrative decision-makers at all levels frequently make decisions which affect the operations of government where individuals are affected. Very often the only clearly applicable measure or touchstone is the public interest. So how is the public interest to be determined?
50. It must be the case that the proper basis of evaluation, of reaching the preferable decision, in these cases, is reference to community standards or community values. It is not the decision-maker’s personal or idiosyncratic view of what will adequately protect the public which is relevant, but what the decision-maker determines will achieve that result in accordance with community standards or values.
51. Although little has been said about the method to be employed in arriving at the preferable decision, and even less about the relevance of community standards or values, a good deal has been written about community standards or values in the judicial context. Because discretionary decision-making is associated more with administrative decision-making than court adjudication, this discussion is equally applicable to administrative decision-making. Indeed, the width of general discretionary decision-making for administrators makes it even more important than it is to court adjudication where discretions are generally more confined. The constraints on court adjudication generally leave less latitude to judges than administrative decision-makers. Greater latitude calls for increased care.
52. In writing for the majority of the court in Mabo v Queensland [No. 2] [1992] HCA 23; (1992) 175 CLR 1 at 42 Brennan J said this:

Whatever the justification advanced in earlier days for refusing to recognize the rights and interests in land of the indigenous inhabitants of unsettled colonies, an unjust and discriminatory doctrine of that kind can no longer be accepted. The expectations of the international community accord in this respect with the contemporary values of the Australian people.

53. Stephen J, in Onus v Alcoa of Australia Ltd [1981] HCA 50; (1981) 149 CLR 27 at 42, dealing with the standing of members and descendants of the Gournditch-jmara Aboriginal people to bring proceedings for contravention of legislation to protect aboriginal relics said this:

Courts necessarily reflect community values and beliefs, according greater weight to, and perceiving a closer proximity to a plaintiff in the case of, some subject matters than others.

54. Lord Atkins’ famous statement of the basis for a tort of negligence was founded not only in the universal moral code but in “a general public sentiment of moral wrongdoing for which the offender must pay” (Donoghue v Stevenson [1932] UKHL 100; [1932] AC 562 at 580).
55. A more recent English example is a family law case, (Miller v Miller [2006] UKHL 24; [2006] 2 AC 618 at 631) in which Lord Nicholls saw “social and moral values” as an aspect of fairness:

Fairness is an elusive concept. It is an instinctive response to a given set of facts. Ultimately it is grounded in social and moral values. These values, or attitudes, can be stated. But they cannot be justified, or refuted, by any objective process of logical reasoning. Moreover, they change from one generation to the next. It is not surprising therefore that in the present context there can be different views on the requirements of fairness in any particular case.

56. Mabo [No. 2] and Donoghue v Stevenson were concerned with questions of law, not with broadly based decision-making where community standards must assume an even more significant role.
57. Sir Anthony Mason in the National Institute of Government and Law’s inaugural public lecture on “The Courts and Public Opinion” (20 March 2002) (NSW Bar Association Journal (Bar News – Winter 2002) 30) stated (at 34) that “[i]n interpreting statutes and giving them an operation, judges will, where appropriate, take into account community standards and values”.
58. The focus, according to Sir Anthony (33), is on reference to “an enduring moral value or principle rather than one which is merely current or transient”. Lying behind Sir Anthony’s remarks was his proposition (30) that “the courts act at their peril if, by their action and decisions, they set at risk public confidence in the courts”.
59. A difficult question arises as to how judges inform themselves of community standards and expectations. Not to mention the further difficulty that in a plural society there may not always be a community standard or expectation. Judges draw on their knowledge of the world. Contrary to common misconceptions, judges live in the same world as their fellow citizens and experience it in much the same way. Indeed they have the advantage of being able to draw on “knowledge gained from other cases” as well as personal experience (33).
60. There may be some occasions, although rare, when community standards can be established by evidence. Most importantly, factors which go to making up community standards, will sometimes be capable of being established by evidence. These occasions will also be rare. It must be recognised, as well, that assessing community standards calls for judgment as much as evidence. In the Administrative Appeals Tribunal it also needs to be remembered that the Tribunal has a statutory obligation to be “economical, informal and quick” as well as “fair and just” (s 2A of the Administrative Appeals Tribunal Act 1975 (Cth)). Reviewing evidence as to community standards will inevitably be time consuming and expensive.
61. Sir Anthony Mason isolates, among “four points to be made in relation to judicial ascertainment of community standards”, the following (33): “the diffidence of judges in discussing how community standards are ascertained and determining what are community standards”. This may explain the absence of much discussion of the issue from decisions in which it might have been relevant. He adds the following further factors:

Secondly, the difficulty of taking judicial notice of matters that are controversial (as community standards generally are); thirdly, the difficulty of determining community standards in the absence of evidence; and finally, the magnitude of the undertaking if evidence were to be required.

62. Nevertheless, Sir Anthony expressed the following views (33):

The judge draws not only on personal experience but on knowledge gained from other cases. In this respect, the judge has a unique window on the world. If you read the transcript of a trial or an appeal book you will begin to understand just how valuable that window is. It gives you a perspective on how people behave, seen through their eyes and the eyes of bystanders. Once you compare the transcript of a trial or an appeal book with a departmental file with its absence of detailed information about individuals, you will appreciate that the judge is better informed about people and the way they behave in particular circumstances than the administrator and even perhaps the politician.

63. Sir Anthony came to the following conclusion (36):

Although there are difficulties in saying that a judge can take judicial notice of public opinion, to require proof by evidence scarcely seems sensible. No doubt the judge can have regard to any relevant pattern of legislative history and statements made by the responsible minister. The judge may also be entitled to have regard to responsible expressions of opinion in the Parliament so long as it appears that they reflect a broad consensus of opinion.
Can the judge go further and look also to informed writings and to the elements of public and political debate and distil from them what are matters of public concern? This is an approach which seems to involve a substantial degree of subjective evaluation. To that extent, it may be thought to be questionable, though in some instances it may be possible to identify matters of public concern with some confidence.

64. Returning to the same theme six years later, Sir Anthony Mason wrote this (‘The Art of Judging’ (2008) 12 Southern Cross University Law Review 33 at 41, 42:

Just how judges inform themselves about matters such as standards, values and sentencing, has been a matter of controversy. How does a judge measure the community’s sense of outrage at the commission of a particular offence? Presumably by ranking it on a scale of seriousness relating to an offence of that kind.
From time to time, politicians criticise judges for being ‘soft’ on crime and embark on a ‘law and order’ campaign, demanding that judges impose harsher sentences. The climate of opinion generated by these campaigns present a dilemma for sentencing judges. Do the judges remain uninfluenced by these events or do they treat them, if endorsed by the electorate, as reflecting a shift in the community’s sense of moral outrage? Although the evidence is not conclusive, it may suggest that the judges give effect to the second alternative.
It is accepted that a judge must decide a case without regard to the popularity or unpopularity of the decision. On the other hand, when a judge has regard to community values and standards in arriving at a decision, the judge is looking to enduring values and standards, not matters of transient impression which may arise by way of reaction to particular and immediate events.

65. Relevant community values will not depend on transient or fashionable thinking. They will not be found in the publications of vocal minorities or the fulminations of the media, motivated by short term considerations and the improvement of circulation or ratings. They will not necessarily reflect the views of individual politicians. Community standards will be found in more permanent values. They will be informed in part by legislation of the parliaments, and especially legislation applicable to the decision-making. Formal statements by ministers will be relevant, but not when they are not speaking officially or when their remarks are not carefully considered or do not appear to reflect “a broad consensus of opinion” (Mason, Courts and Public Opinion at 36). Decisions will also be informed by the decision-maker’s belief based on experience. Evidence will rarely be of any practical assistance.
66. It will often be impossible for decision-makers to articulate the basis for their determination of what community standards require in a particular case, because the conclusion will not be based on evidence. Nevertheless, decision-makers are members of the community and exposed to the processes of its instrumentalities. They may not always be able to empathise with particular individuals or groups, because of lack of exposure to local considerations, but they are exposed to the short term and long term thinking and dissemination of ideas which determine the way society changes and develops.
67. Drawing on these considerations, even without detailed analysis of them, in reasons for decision, will lead to better formed judgments which more truly reflect community standards. An assessment expressed to be guided by community standards or values, without more, will still be likely to lead to better decision-making than if no attempt at such an assessment is made. Expressing an opinion that current community standards require a particular outcome will be likely to represent a better decision than one couched in personal terms. Such an approach will sometimes lend itself to reasons. Where there are no reasons, however, the decision and the basis for it will still be better than with reasons couched in personal belief.
68. An additional benefit may be that making decisions in terms expressed to accord with community values will present administrative decisions more persuasively to the public. The decision-maker will be making it clear that the decision is not based on any personal conclusions, but on the decision-maker’s belief as to what community values require. Some of the criticism that decisions receive from time to time in the media may be avoided.

CONCLUSION

69. Returning to the facts of this matter, we consider that there is reason to believe that Rent to Own is likely to contravene the obligations that will apply under s 47 of the Act if the licence is granted. That, to our minds, is an end to the matter. The decision not to grant a licence should be affirmed. If we turn, however, to the question of whether it is appropriate to consider whether the public interest could be adequately protected by the grant of a licence with conditions, we consider that this is not such a case. We say this, whatever is the test. However, turning to community standards or values we consider that current community standards or values compel a decision that it is inappropriate to consider a licence with conditions. If, contrary, to that decision, it is appropriate to consider the question, we consider that conditions will not adequately protect the public interest. We consider that this conclusion is also compelled by current community standards or values.
70. We assess current community standards as putting a high value on the skill and integrity of persons involved with credit transactions. The importance of this value is such that considerations such as the expectation of someone who has been involved in financing credit transactions for a considerable time to be allowed to continue to do so is secondary. This is so even when the inability to realise the expectation will have financial consequences. This community expectation, we consider, is heightened where, as here, the credit provider is dealing with borrowers who are not well off and who are likely to have less understanding of the costs and lawfulness of credit transactions than better off and more astute borrowers may have.
71. Mr Tapping, as the guiding mind of Rent to Own, has been responsible for a series of breaches of state legislation with respect to both Rent to Own and Cash on Tap. The series of breaches represent a pattern of conduct both because there were two separate kinds of breach and because there were multiple breaches in each case. It seems that Mr Tapping’s principle defence is that he was not aware that the conduct was in breach of state legislation. That is just another way of saying, however, that although he was managing two significant businesses involving the provision of credit he did not take steps to discover what his obligations were and how they could be performed. Secondly, Mr Tapping filled out an application form for the licence in a way which contained false information in one respect. Finally, Mr Tapping has continually maintained, even during the hearing, that he has done no wrong. He must feel that provided his customers are content, a doubtful conclusion in any event, breaches of the law do not amount to wrongs.
72. The future of Mr Tapping’s companies is in his own hands. He can apply again for a licence. Were he to retain professional advice in the running of his businesses so that there was no risk of non-compliance and were he to change his attitude, he might qualify for a licence. It is for Mr Tapping to bring about the changes, however, not for ASIC or the Tribunal to seek to rehabilitate him, while protecting the public in the meantime, although he freely operates under a licence.
73. ASIC takes the view that without a licence Rent to Own cannot even perform its obligations under existing contracts made after 1 July 2010 or receive payments under them. That is a surprising proposition. It would require very clear legislation to deprive one party to a contract of the right to perform or enforce that contract. The consequence would be windfall benefits for consumers. Worse, consumers who had made contracts with Rent to Own would not be able to enforce them. Ultimately we need not decide whether ASIC is correct as it accepts that Rent to Own could be granted a limited licence which would avoid this problem. ASIC submits that Rent to Own should have a limited licence to enable it to sell its existing contracts. We do not agree that this is the appropriate result. Rent to Own should remain bound by its existing contracts and entitled to their benefits. A licence will be issued limited to those rights and obligations.
74. The decision under review will be set aside and a decision substituted that a licence be granted to Rent to Own limited to performing and enforcing contracts already made. The matter will be remitted to ASIC to perfect the grant.

I certify that the preceding seventy-four (74) numbered paragraphs are a true copy of the reasons for decision herein of the Honourable Justice Downes, President and Deputy President P E Hack SC.

S. Robson, Associate:

Dated: 6 October 2011

Dates of hearing	9 August and 7 September 2011
Date final submissions received	9 September 2011
Applicant	In Person
Solicitors for the Respondent	Nicholas Goodstone, ASIC
Counsel for the Respondent	Mr D Kelly SC with Mr D Butler