FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission v Donald [2003] FCAFC 318

CORPORATIONS – application to the Administrative Appeals Tribunal to review a decision by the Australian Securities & Investments Commission to impose a banning order on a dealer’s representative – whether the Tribunal can exercise the power of the Commission to decide to accept a written undertaking where the Commission’s decision to accept or reject a written undertaking not reviewable by the Tribunal – for the purpose of reviewing the Commission’s banning order decision, the Tribunal had the power to decide that the Commission accept a written undertaking

Corporations Law ss 829, 830(1), 831(1) and 998(1)

Administrative Appeals Tribunal Act 1975 (Cth) ss 25 and 43(1)

Australian Securities and Investments Commission Act 1989 (Cth) s 93AA

Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409 followed

Stevenson v Commissioner of Taxation (1991) 29 FCR 282 referred to

Re Control Investments Pty Ltd and Australian Broadcasting Tribunal (No 2) (1981) 3 ALD 88 followed

Fletcher v Federal Commissioner of Taxation (1988) 19 FCR 442 followed

Secretary, Department of Employment, Education, Training and Youth Affairs v MacKay (1998) 29 AAR 95; 58 ALD 130 referred to

Secretary, Department of Social Security v Hodgson (1992) 37 FCR 32 followed

Kerslake v Repatriation Commission (1996) 40 ALD 547 referred to

Re BHP Petroleum Pty Ltd and Others and Minister for Resources (1993) 30 ALD 173 considered

BHP Petroleum (Timor Sea) Pty Ltd and Others v Minister for Resources (1994) 49 FCR 155 referred to

Comcare v Burton (1998) 157 ALR 522; 50 ALD 846 considered

Lees v Comcare (1999) 56 ALD 84 referred to

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v ANDREW WILLIAM DONALD

V 721 of 2002

GRAY, KENNY AND DOWNES JJ

23 DECEMBER 2003

MELBOURNE

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.         The appeal be dismissed.

2.         The appellant pay the respondent’s costs of the appeal.

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

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

GRAY J:

1                     This appeal is from a judgment of a single judge of the Court, who dismissed an appeal from a decision of the Administrative Appeals Tribunal (‘the Tribunal’).  The appeal raises a question as to the powers of the Tribunal under the Corporations Law, now repealed and replaced by the Corporations Act 2001 (Cth).  The question is whether, when reviewing on the merits a decision of the Australian Securities and Investments Commission (‘ASIC’) to impose a banning order on the respondent as a dealer’s representative, the Tribunal had power to decide that ASIC should accept a written undertaking from the respondent.  The question arises because, although there was a right to apply to the Tribunal for review on the merits of a decision of ASIC to impose a banning order, there was no right to apply to the Tribunal for review of a decision of ASIC to refuse to accept an undertaking.

2                     The argument put on behalf of ASIC on the appeal was based on the assumption that Parliament had refrained deliberately from creating a right to have decisions to refuse to accept undertakings reviewed by the Tribunal, because it wished ASIC to have control over the question of undertakings, to the exclusion of the Tribunal.  In my view, it is equally open to assume that Parliament did not consider it necessary to give an express right to apply to the Tribunal for review of a decision to refuse to accept an undertaking.  Such a decision would result in ASIC taking other action, by means of a decision in respect of which a right to apply to the Tribunal was otherwise given.  The decision to impose a banning order in the present case is an example.  It is difficult to believe that Parliament intended to place the Tribunal in a situation in which, if it thought that a banning order was too severe a penalty for the conduct of the person concerned, it would have to impose no penalty at all, because it had no power to bring about the acceptance of an undertaking.

3                     For the reasons given by Kenny J, which I have read in draft form, I am of the view that s 43 of the Administrative Appeals Tribunal Act 1975 (Cth) provides an ample source of power for the Tribunal to do what it did in the present case, and that no authority stands in the way of that proposition.  I agree with her Honour’s conclusion, with which Downes J also agrees, that the appeal should be dismissed.  ASIC should be ordered to pay the respondent’s costs of the appeal.

Associate:

Dated:              23 December 2003

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

KENNY J:

introduction

4                     This is an appeal from a judgment of a judge of the Court dismissing an appeal under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (“the AAT Act”) from a decision of the Administrative Appeals Tribunal (“the Tribunal”).

5                     In May 1998, the respondent, Andrew William Donald, was a dealer’s representative at ABN AMRO Equities Australia Ltd.  Towards the close of trading on 29 May 1998, he arranged for the price of certain shares on the Australian Stock Exchange Automated Trading System to increase by 6.7% above the price for the shares previously reached on that day.  On 10 July 1998, the appellant, the Australian Securities and Investments Commission (“the Commission”) began an investigation under s 13 of the Australian Securities and Investments Commission Act 1989 (“the ASIC Act”) (as it then was) into suspected contraventions of s 998 of the former Corporations Law (“the Law”).  The Commission found that the 6.7% price increase was not genuine.  On 20 July 1999, the Commission made a banning order under ss 829 and 830 of the Law against the respondent that prohibited him for acting as a dealer’s representative for a period of four years.  The Commission’s decision was subject to merits review by the Tribunal and a successful appeal to this Court.  The matter came before the Tribunal again in November 2000 and, subsequently, in 2001.

6                     By letter dated 19 June 2001, the Commission stated that it declined to accept an undertaking proffered by the respondent by letter dated 18 June 2001, following the delivery of the Tribunal’s reasons for decision on 4 May 2001.  On 21 June 2001, the Tribunal set aside the Commission’s decision of 20 July 1999 and made another banning order, this time effective from 20 July 1999 to 22 November 2000.  The Tribunal also decided that the Commission accept a written undertaking from the respondent to the effect that he would complete certain courses offered by the Securities Institute; co-operate with the Australian Securities Exchange and the Commission in the preparation and presentation of seminars on particular subjects; undertake not to create a false or misleading appearance of active trading in any securities on a stock market or with respect to the market for, or the price of, any securities; and give a copy of the undertaking to all licensed dealers by whom he was employed during the period of the banning order.

7                     The question on this appeal is whether it was open to the Tribunal to decide that the Commission accept the respondent’s undertaking.  For the reasons that appear below, I agree with the learned primary Judge that this course was open to Tribunal.

legislative provisions

8                     Two provisions of the AAT Act are pertinent to this appeal.  They are ss 25 and 43.  Section 25 relevantly provides:

(1)               An enactment may provide that applications may be made to the Tribunal:

(a)               for review of decisions made in the exercise of powers conferred by that enactment; …

…

(4)               The Tribunal has power to review any decision in respect of which application is made to it under any enactment.

… .

Section 43 relevantly provides:

(1)               For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing:

(a)               affirming the decision under review;

(b)               varying the decision under review; or

(c)                setting aside the decision under review and:

(i)                 making a decision in substitution for the decision so set aside; or

(ii)               remitting the matter for reconsideration in accordance with any directions or recommendations of the Tribunal.

…

(6)        A decision of a person as varied by the Tribunal, or a decision made by the Tribunal in substitution for the decision of a person, shall, for all purposes (other than the purposes of applications to the Tribunal for a review or of appeals in accordance with section 44), be deemed to be a decision of that person and, upon the coming into operation of the decision of the Tribunal, unless the Tribunal otherwise orders, has effect, or shall be deemed to have had effect, on and from the day on which the decision under review has or had effect.

9                     In making the banning order against the respondent, the Commission relied on pars 829(d), (f) and (g) of the Law.  The Tribunal ultimately relied simply on par 829(d).  Section 829 of the Law provided that, subject to s 837, the Commission may make a banning order against a natural person (other than a licensee) if, amongst other things:

(d)               he or she contravenes a securities law;

            …

(f)               the Commission has reason to believe that he or she has not performed efficiently, honestly and fairly the duties of:

(i)                         a representative of a dealer; or

(ii)                       a representative of an investment adviser; or

(g)              the Commission has reason to believe that he or she will not perform efficiently, honestly and fairly the duties of:

(i)         a representative of a dealer; or

                        (ii)        a representative of an investment adviser.

10                  Section 837 provided that the Commission must not make certain orders unless a hearing is first given.  In connection with par 829(d), the Commission and the Tribunal found that the respondent was in breach of subs 998(1) of the Law, which provided:

A person shall not create, or do anything that is intended or likely to create, a false or misleading appearance of active trading in any securities on a stock market or a false or misleading appearance with respect to the market for, or the price of, any securities.

11                  Section 830 of the Law concerned the nature of a banning order that may be made.  Subsection 830(1) provided:

Where this Division empowers the Commission to make a banning order against a person, the Commission may, by written order, prohibit the person:

(a)               in any case – permanently; or

(b)               except where the Commission is empowered by virtue of paragraph 828(c) or 829(e) to make the order – for a specified period;

from doing an act as:

(c)                a representative of a dealer;

(d)               a representative of an investment adviser; or

(e)                a representative of a dealer or of an investment adviser;

whichever the order specifies.

Subsection 831(1) of the Law also provided:

An order made against a person under subsection 830(1) may include a provision that permits the person, subject to such conditions (if any) as are specified, to do, or to do in specified circumstances, specified acts that the order would otherwise prohibit the person from doing.

12                  The Tribunal referred to this provision in its reasons for decision of 2 July 2001, although it did not apparently rely on the provision in making its decision.

13                  Section 1317B of the Law was a law of the kind contemplated by subss 25(1) and (4) of the AAT Act.  Subject to exceptions that are not presently relevant, s 1317B provided that an application may be made to the Tribunal for review of a decision made under the Law by the Commission.

14                  Subsection 244(2) of the ASIC Act also provides that an application may be made to the AAT for review of certain decisions made by the Commission under the ASIC Act.  Subsection 244(2) does not, however, include a decision made under s 93AA of the ASIC Act.  Section 93AA permitted the Commission to accept a written undertaking.  At the time of making the banning order, the Commission conceded that it had available (although it did not exercise) the power conferred by s 93AA, which was in the following terms:

(1)       The Commission may accept a written undertaking given by a person in connection with a matter in relation to which the Commission has a function or power under this Act.

(2)               The person may withdraw or vary the undertaking at any time, but only with the consent of the Commission.

(3)               If the Commission considers that the person who gave the undertaking has breached any of its terms, the Commission may apply to the Court for an order under subsection (4).

(4)               If the Court is satisfied that the person has breached a term of the undertaking, the Court may make all or any of the following orders:

(a)               an order directing the person to comply with that term of the undertaking;

(b)               an order directing the person to pay to the Commonwealth an amount up to the amount of any financial benefit that the person has obtained directly or indirectly and that is reasonably attributable to the breach;

(c)                any order that the Court considers appropriate directing the person to compensate any other person who has suffered loss or damage as a result of the breach;

(d)               any other order that the Court considers appropriate.

15                  Upon conducting an investigation under s 13 of the ASIC Act, the Commission had available to it the power conferred by s 93AA.  That is, pursuant to s 93AA, it was open to the Commission to accept an undertaking by the respondent in relation to the Commission’s investigation of the respondent’s breaches of subs 998(1) of the Law.  I note too that s 11 of the ASIC Act (as amended by Corporations Legislation Amendment Act 1990 (Cth) (No 110 of 1990)) made more general provision for the powers and functions of the Commission.

the parties’ submissions

16                  The Commission did not dispute that, by virtue of s 1317B of the Law, the Tribunal had jurisdiction to review the Commission’s decision to make a banning order pursuant to ss 829 and 830 of the Law.  The Commission contended, however, that the Tribunal’s power did not extend to deciding that the Commission accept a written undertaking under subs 93AA(1) of the ASIC Act.  This decision was, so the Commission argued, tantamount to the Tribunal’s reviewing and setting aside the Commission’s earlier decision not to accept the respondent’s undertaking.

17                  The Commission submitted that, by virtue of subs 244(2) of the ASIC Act, the Tribunal did not acquire jurisdiction to review a decision under s 93AA of the ASIC Act.  It contended that the Tribunal did not have power to do indirectly that which it could not do directly.  In this connection, the Commission relied on the decision of the Tribunal in Re BHP Petroleum Pty Ltd and Minister for Resources (1993) 30 ALD 173 (“BHP Petroleum”).

18                  In BHP Petroleum, the Tribunal (which was constituted by President O’Connor J and Members R Gillham and D L Elsum) said, at 178:

[T]he tribunal’s powers under s 43 of its Act remain subject to the review powers conferred on it by the provisions of the relevant enactment.  In Fletcher [see below], the tribunal stands in the shoes of the decision-maker only in so far as the decision-maker exercises powers which are themselves subject to review.  … .

…

However, the tribunal cannot aggregate powers to itself which have not been specifically conferred by statute.  In the present case, to exercise ministerial powers which are not reviewable would be to accrue jurisdiction it does not have, and would be, in our view, unlawful.

19                  BHP Petroleum concerned a decision by the Minister to refuse to issue a certificate under s 20(1) of the Petroleum Resource Rent Tax Assessment Act 1987 (Cth) (“PRRTA Act”).  Although a decision of this kind could, in some circumstances, be the subject of Tribunal review, the Tribunal found that the PRRTA Act prevented the Minister and the Tribunal from entertaining the original application for a certificate because the application failed to comply with certain statutory requirements and these defects could not be cured because of a statutory time bar.  Although the Tribunal held that it would have been open to the Minister to act of his own motion and extend the time during which he could consider the matter, the Tribunal held that it had no jurisdiction to review an adverse decision by the Minister in exercise of his “own motion” power.

20                  In this case, the respondent contended that, besides the power in ss 829 and 830 of the Law to make a banning order, the appellant:

… was vested with a number of other powers which were relevant to that decision.  Such powers included the power to include provisions in the banning order that suspended or limited the operation of the banning order on certain conditions or in specified circumstances, and the power to accept written undertakings.

21                  The respondent submitted that, in making a banning order, the original decision-maker was required to consider whether the circumstances required an exercise of these additional powers.  Further, pursuant to subs 43(1) of the AAT Act, “the Tribunal was permitted to choose whether it should make a banning order with or without specified conditions, or whether it should accept an undertaking proffered by the Respondent”.  The respondent relied on the now familiar observations of Davies J Re Control Investment Pty Ltd and Australian Broadcasting Tribunal (No 2) (1981) 3 ALD 88 (“Re Control”).  Speaking as President of the Tribunal, his Honour said, at 92, in relation to subs 43(1) of the AAT Act that:

[T]he provision ‘For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision …’ is not concerned to confer upon the Tribunal authority to limit its function but rather to confer upon it an amplitude of powers so that the Tribunal may exercise, if it is convenient and useful to do so, not only the decision-making power upon which the decision-maker relied, but all relevant powers and discretions which were conferred by the enactment upon the decision-maker.  The provision extends the authority of the Tribunal so that it may more adequately exercise its function of reviewing on the merits the subject decision.

22                  The respondent submitted that, for the purpose of reviewing the Commission’s decision and having regard to the material before it, the Tribunal could exercise any of the Commission’s powers and discretions that were relevant to the decision under review.

consideration of the parties’ submissions

23                  When the respondent made application to the Tribunal in August 1999, he sought review of the banning order that had been made against him by the Commission under ss 829 and 830 of the Law.  The Tribunal plainly had jurisdiction to review this decision by virtue of s 25 of the AAT Act and s 1317B of the Law.  In exercising this jurisdiction, the question for the Tribunal was whether the decision under review was the correct or preferable one on the material before it:  see Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409 at 419 per Bowen CJ and Deane J.

24                  The effect of subs 43(1) of the AAT Act is that, “[f]or the purpose of reviewing a decision”, the Tribunal stands in the place of the original decision-maker.  That is, for the purpose of determining whether the decision under review was the correct or preferable decision on the material before it, the Tribunal “may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision” (emphasis added).  As a consequence, the Tribunal is not confined to the decision-making power upon which the previous decision-maker actually relied in making the decision under review, but is armed with all the powers and discretions of the original decision-maker that are relevant to the review:  see, e.g., Re Control at 92 per Davies J; Fletcher v Commissioner of Taxation (1988) 19 FCR 442 (“Fletcher”) at 453 per Lockhart, Wilcox and Burchett JJ; Secretary, Department of Social Security v Hodgson (1992) 37 FCR 32 (“Hodgson”) at 39-40 per Hill J; and Secretary, Department of Employment, Education, Training and Youth Affairs v MacKay (1998) 29 AAR 95 at 98 per Kenny J.

25                  The decision of the Full Court in Fletcher well illustrates the effect of subs 43(1) of the AAT Act.  In that case, the Commissioner of Taxation rejected the taxpayers’ claims for allowable deductions in relation to certain annuity payments and disallowed their subsequent objections.  On reviewing the Commissioner’s objection decisions, the Tribunal not only affirmed the Commissioner’s disallowance of the objections but also exercised the discretion conferred upon the Commissioner by s 177F(1) of the Income Tax Assessment Act 1936 (Cth), to cancel a tax benefit (as defined in s 177C of that Act).  The Full Court rejected the taxpayers’ submission that subs 43(1) of the AAT Act did not empower the Tribunal to exercise a discretion vested in the decision-maker at an earlier stage in the process and unexercised by the Commissioner.  In so doing, the Full Court stated, at 452:

As a matter of principle, it must be correct, as submitted on behalf of [the taxpayers], that the powers and discretions referred to by s 43(1) are the powers and discretions vested in the original decision-maker for the purposes of making the decision under review.  They do not include any powers and discretions which may be vested in the decision-maker for some other purpose.  … .

However, we do not think that it follows that, in the present case, the Tribunal lacked jurisdiction to exercise the discretion conferred upon the Commissioner by s 177F(1).

26                  The Full Court reached this conclusion, because, after considering the relevant statutory provisions, it concluded, at 453, that:

… in determining an objection to an assessment, the Commissioner is entitled to make a determination under s 177F of the Act; and thereafter to give effect to that determination by an appropriate decision under s 186.

By force of s 43 of the Administrative Appeals Tribunal Act, the Tribunal has all the powers and discretions that are conferred by s 186 of the Income Tax Assessment Act upon the Commissioner.  In exercising those powers and discretions the Tribunal was bound to consider the facts as they were proved in evidence before the Tribunal, making the decision which, upon that evidence and at that time, was the correct or preferable decision to be made in considering the objection.  The Tribunal was not confined either to the material which was before the Commissioner, as primary decision-maker, or the events which had occurred up to that time … .

Once it is understood that, in exercising his powers under s 186, the Commissioner would have been free to exercise a discretion under s 177F of the Income Tax Assessment Act, it follows that, in reviewing the Commissioner’s decision under s 186, the Tribunal is free to exercise that same discretion if, upon the material then before it, it seems proper to take that course.

27                  The Full Court made some further observations that are relevant to the present case, saying, at 453-454:

In coming to that conclusion, we appreciate that s 177F(3)-(8) provides a regime whereunder the Commissioner may make compensating adjustments in respect to any taxpayer. … .  In a case where the requisite adjustment needs to be made to an assessment not before the Tribunal – either because it relates to some other taxpayer or to some other year of income – the Tribunal could not itself make an adjustment under s 177F(3).  But we see no difficulty about the Commissioner following up the decision of the Tribunal by making the appropriate adjustment, in the same way as he would do if he himself had made the original s 177F(1) determination.  (Emphasis added)

28                  The decision in Fletcher was the basis of the decision in Stevenson v Commissioner of Taxation (1991) 29 FCR 282 (“Stevenson”) that the Tribunal could give effect to its determination that the applicant’s taxable income, and the tax due, in respect of the relevant income years were amounts greater than the amounts specified in the relevant amended assessments.  Jenkinson J said, at 299, that:

The means available to the Tribunal to give effect to that conclusion were, in my opinion to make decisions, first, that the respondent’s decision under review be varied by adding thereto a decision that the taxable income of the applicant and the tax payable thereon in respect of the year of income were respectively the amounts determined by the Tribunal and, secondly, that the matter be remitted to the respondent with a direction that he further amend the assessment accordingly.

29                  When the Tribunal reviewed the Commission’s banning order decision, the Tribunal had, for this purpose, all the powers and discretions that were available to the Commission when it made the decision.  These powers and discretions included the powers and discretions conferred by the Law and the ASIC Act.  Although the Commission made its decision in exercise of the power conferred by ss 829 and 830 of the Law (and the decision is therefore a reviewable decision) and it did not exercise the power conferred by s 93AA of the ASIC Act, the power conferred by s 93AA was nonetheless among the powers and discretions that were exercisable by the Commission and relevant to its consideration of the decision that should be made in respect of the respondent as a consequence of its investigation.  Before making its ultimate decision, the Commission would properly have considered all these powers and discretions.

30                  When the Tribunal stands in the stead of the Commission, it is no less favourably placed than the Commission.  The Tribunal has all the powers and discretions that are vested in the original decision-maker, provided that their exercise is only for the purpose of reviewing a decision that the Tribunal has power to review.  For the purpose of reviewing the Commission’s decision under ss 829 and 830 of the Law, the Tribunal had, by virtue of s 43(1) of the AAT Act, the same powers and discretions as the Commission.  In determining whether the Commission made the correct or preferable decision, the Tribunal was also bound to consider the powers and discretions that were exercisable by the Commission and were relevant to its consideration of the decision that should be made in respect of the respondent as a consequence of the Commission’s investigation.  This included the power conferred on the Commission by s 93AA of the ASIC Act.  As Hill J said in Hodgson, at 40:

It is not necessary or permissible to put a gloss upon s 43 that would permit the Tribunal to exercise the decision-maker’s powers and discretions only when those powers or discretions are necessarily interdependent with the decision under review or where the power or discretion to be exercised by the Tribunal is necessarily involved in the making of the decision under review.

31                  In this case, there is no basis for any supposition that the Tribunal exercised any power or discretion for any purpose other than reviewing the Commission’s original decision.

32                  Upon the material before it, it was open to the Tribunal to decide that the correct or preferable decision was that the respondent be subject to a more limited banning order and that the Commission accept a written undertaking pursuant to s 93AA of the ASIC Act.  Because there is no right under subs 244(2) of the ASIC Act to apply to the Tribunal for a review of a decision by the Commission not to accept such an undertaking, there is some force in the Commission’s submission that this conclusion permits the Tribunal to do indirectly what it cannot do directly.  The answer to the Commission’s complaint lies, however, in subs 43(1) of the AAT Act.  To adopt what Finn J said in Comcare v Burton (1998) 50 ALD 846 (“Comcare v Burton”), at 851, subs 43(1) “is not itself a source of jurisdiction”, although “it confers power on the tribunal in relation to matters in which it has jurisdiction” (subject to the limitation that it is “for the purpose of reviewing a decision”).  Accordingly, whilst there is no right to apply to the Tribunal to review a decision by the Commission not to accept an undertaking under s 93AA of the ASIC Act, it is open to the Tribunal, just as it was open to the Commission, to treat s 93AA as amongst the powers available to it, providing it does so only for the purpose of reviewing the reviewable decision that was made by the Commission.

33                  Of course, the Tribunal is not entitled to exercise a power conferred on a decision-maker for some purpose unrelated to the decision under review.  What this means in a given case must be determined by reference to the nature of the decision that the original decision-maker was required to make.  Although the decision under review was made under the Law, the nature of the decision that the Commission was called on to make must be judged in its proper context.  In this case, the Commission had to decide what response it should make following its investigation into the respondent’s activities at the close of trading on 29 May 1998.  As Finn J said in Comcare v Burton, at 852:

The process of reviewing [the reviewable] decision is to occur in the setting of the question(s) that gave rise to the decision.  And while in that process the tribunal can exercise its s 43(1) powers, it nonetheless is obliged to answer the same question(s) as was (were) before the … decision-maker:  Hospital Benefit Fund of Western Australia v Minister for Health, Housing and Community Services [(1992) 39 FCR 225 at 234].

34                  In Comcare v Burton, his Honour held that the original and reconsideration decision-makers had not been asked to consider any question of compensation for permanent impairment.  They had only been asked to decide whether the applicant should receive payment for taxi fares to the rooms of those providing treatment for her injury.  The Tribunal had, his Honour held, no jurisdiction to consider the compensation question: see 50 ALD at 852.  In this case, in contrast to the situation in Comcare v Burton, the Commission would properly have given consideration to the question whether it should accept a written undertaken from the respondent under s 93AA of the ASIC Act as part of its response to its investigation of his activities on 29 May 1998.

35                  Further, the Tribunal’s decision in BHP Petroleum does notpersuade me to a different conclusion.  This decision was overturned by a Full Court of this Court (Jenkinson, Beaumont and Heerey JJ) in BHP Petroleum (Timor Sea) Pty Ltd v Minister for Resources (1994) 49 FCR 155.  Amongst other things, the Court held that the Tribunal had jurisdiction to review the Minister’s refusal to issue a certificateunder s 20(1) of the PRRTA Act.  Jenkinson and Beaumont JJ specifically refrained from expressing a conclusion about the Minister’s “own motion” power:  49 FCR at 158 and 172.

36                  There was some discussion at the hearing of the appeal as to how the Tribunal might best give effect to a decision that the Commission accept a written undertaking.  Bearing in mind the full terms and effect of s 93AA, it is for the Commission, and not the Tribunal, to accept an undertaking given under this provision.  As in Fletcher, the original decision-maker is obliged to “follow up” the Tribunal’s decision by entering into the undertaking that the Tribunal has prescribed in the same way the original decision-maker would have done had the original decision-maker decided to accept the undertaking in the first place.  To adapt the observations of Jenkinson J in Stevenson, the appropriate course was for the Tribunal, first, to decide that the Commission accept a written undertaking by the respondent in the terms it specified and, secondly, that the matter be remitted to the Commission with a direction that it enter into the undertaking accordingly.  The remittal of the matter was, in the present case, to be implied from the terms of the Tribunal’s decision and reasons for decision.

37                  For the reasons stated, the appeal should be dismissed.

Associate:

Dated:              23 December 2003

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

DOWNES J:

Summary

38                  In 1999 the Australian Securities and Investments Commission ("ASIC") made a banning order against the respondent, a dealer’s representative, pursuant to s 829 and s 830 of the Corporations Law 1989 ("the Law").  A decision to make a banning order is reviewable by the Administrative Appeals Tribunal pursuant to subs 1317B(1) of the Law.  The respondent applied to the Tribunal for review of the decision.  The Tribunal disposed of the matter by reducing the period of the banning order and accepting a written undertaking from the appellant in terms specified by the Tribunal. Although ASIC has power to accept a written undertaking in an appropriate case pursuant to subs 93AA(1) of the Australian Securities and Investments Commission Act 1989 (Cth) ("the ASIC Act")there is no provision expressly conferring jurisdiction on the Tribunal to review a decision under that section.

39                  ASIC appealed from the decision of the Tribunal on the ground that the Tribunal had no power to resolve the matter by inviting the appellant to give a written undertaking although it did have power to vary the banning order. I have concluded that the Tribunal did have power to decide that ASIC should accept an undertaking.  First, the power of ASIC to accept an undertaking is not a matter of substantive jurisdiction but a matter of what remedy should be imposed.  It does not lend itself to the conferring of a power of review.  Any such power will usually address the substantive matter that attracts the intervention of ASIC.  Secondly, although the jurisdiction of the Tribunal is found in the conferral of powers of review by individual Acts of the Parliament, the decisions which the Tribunal may make, pursuant to subs 43(1) of the Administrative Appeals Tribunal Act 1975 ("the Act"), when it has substantive jurisdiction, include the exercise of "all the powers and discretions"which the original decision-maker had.  In the present case that includes the power to decide that an undertaking should be accepted.

INTRODUCTION

40                  On 20 July 1999 ASIC made a banning order, pursuant to ss 829 and 830 of the Law, prohibiting the respondent from acting as a dealer's representative or investment adviser for a period of four years.  On 2 July 2001 the Tribunal (Deputy President Forgie, Members Elsum and McLean) set aside the banning order and substituted a banning order from 20 July 1999 to 22 November 2000 as well as deciding that the Commission should accept a written undertaking from the applicant to the effect that he would complete certain Securities Institute courses, co-operate with the Australian Securities Exchange and ASIC in preparing certain seminars, undertake not to create a false or misleading appearance with respect to securities and give a copy of the undertaking to all licensed dealers by whom he was employed over a period of three and a half years.  The Tribunal had previously determined that if the respondent was not prepared to give the undertaking then the Tribunal would affirm the banning order made by ASIC.

41                  ASIC was unsuccessful in an appeal to Merkel J in this Court. ASIC has appealed from that decision to the Full Court.  Although nothing turns on this, it is appropriate to note that the Tribunal decision presently under challenge is the second decision of the Tribunal relating to the banning order.  An earlier decision of the Tribunal was set aside in this Court by Heerey J and the matter remitted for rehearing.

42                  It is also appropriate to note that on 22 November 2000 the Tribunal (President O'Connor J) granted a stay of the banning order.  It follows that in so far as the Tribunal upheld the banning order it did so up to the time when the stay was granted.  On 18 June 2001 the respondent's solicitors indicated that the respondent was prepared to give the proposed undertaking.  On 19 June 2001 ASIC declined to accept the undertaking.  This was before the Tribunal determined, after hearing argument, that the Tribunal had power to decide that the giving of an undertaking was an appropriate way for the matter to be resolved.  It seems, therefore, that pending the resolution of the matter there has neither been an undertaking in place nor a banning order.  It further seems that if it is ultimately determined that the banning order should stand it would now be spent.  If the Court were to uphold the appeal, consideration would have to be given by the Tribunal to the question of whether some different banning order should be imposed.

THE STATUTORY PROVISIONS AND THE FACTS

43                  This appeal must be determined under the provisions of the Law and the ASIC Act.  This legislation has now been replaced by the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001.

44                  Section 829 of the Law authorized ASIC to make a banning order against a person in a number of circumstances.  These circumstances included where:

"(d)       he or she contravenes a securities law;

...

   (f)        the Commission has reason to believe that he or she has not performed efficiently, honestly and fairly the duties of:

(i)          a representative of a dealer; or

(ii)          a representative of an investment adviser; or

(g)        the Commission has reason to believe that he or she will not perform efficiently, honestly and fairly the duties of:

(i)          a representative of a dealer; or

(ii)          a representative of an investment adviser."

45                  By s 830 a banning order is an order prohibiting a person from acting as a representative of a dealer or investment adviser.  Subsection 831(1) allows a banning order to permit conduct, which would otherwise be prohibited, subject to conditions.

46                  The respondent was a representative of a dealer.  A dealer is a person who carries on a securities business (s 9) which is the business of dealing in securities (s 93) such as stocks and shares (s 92).  ASIC made the banning order against the respondent under each of subss 829(d), (f) and (g).  The contravention relied upon for the purpose of subs 829(d) was a contravention of subs 998(1) of the Law concerning false or misleading appearances relating to trading on markets.  The respondent was found to have allowed bids to be placed in the market considerably higher than the most recent prior bids thereby giving a false or misleading appearance as to the price of certain shares.  This conduct was also the basis of the findings under subss 829(f) and (g).

47                 Section 1317B(1) of the Law conferred jurisdiction on the Tribunal to review "a decision made under this Law" by ASIC.  Section 1317C excluded certain decisions, not relevant to the present matter, from the application of s 1317B.  Accordingly, there was a right of review of ASIC's decisions that the appellant had contravened s 998(1) and that it had reason to believe that the respondent had not performed efficiently, honestly and fairly the duties of a representative of a dealer.  As part of its review the Tribunal had power to consider the banning order that had been made.  It would seem that it could also have included conditions under s 831.

48                  The ASIC Act established ASIC and conferred powers on it.  Part 3 of the Act conferred upon ASIC extensive powers to investigate and gather information relating to the administration of the Law where it had reason to suspect that there may have been a contravention (s 13).  The last section in the Part was s 93AA, which allowed ASIC to "accept a written undertaking given by a person in connection with a matter in relation to which the Commission has a function or power under this Act."  Section 244 conferred jurisdiction on the Tribunal to review decisions of ASIC made under the ASIC Act by reference to specific sections.  The sections did not include s 93AA.

DISCUSSION OF THE ISSUES: JURISDICTION AND REMEDY

49                  It was common ground in this appeal that ASIC's investigation of the respondent fell within the ASIC Act and that there was "a matter in relation to which the Commission ha[d] a function or power under [that] Act" (s 93AA).  Accordingly, it would have been open to ASIC to decide that it was appropriate to resolve the matter, in whole or in part, by the acceptance of an undertaking of the kind settled upon by the Tribunal.

50                  ASIC submits that it would only have been open to the Tribunal to decide that an undertaking was appropriate if legislation expressly conferred jurisdiction to review a decision made under s 93AA.  It advances the simple proposition that because s 93AA is not among the sections identified as giving rise to a right of review by s 244 of the ASIC Act it follows that the Tribunal cannot act under the section.  Notwithstanding the simplicity and apparent logic of the submission I cannot accept it.  Because ASIC’s submission relies so heavily on the absence of an express right of review attached to s 93AA it is appropriate to consider the nature of the power conferred by the section and to inquire whether such a right of appeal might be expected.

51                  The nature of s 93AA is best understood by reference to the difference between jurisdiction and remedy; between the process of determining, for example, whether there has been a contravention of the Law and what should be the response. Similar differences are present in all aspects of the law.  In the criminal law the determination of whether a crime has been committed is separate from the determination of what penalty should be imposed.  In the law of contract breach is distinguished from remedy.  In the law of negligence duty and breach are separate from damages.  In merits review before the Administrative Appeals Tribunal jurisdiction is conferred by a combination of s 25 of the Act and the legislation providing for the right of review.  The power to decide what should happen is conferred by s 43 of the Act.

52                  Subsection 998(1) of the law is concerned with contravention.  Section 93AA of the Act is concerned with response.  The focus of the section is upon the means by which ASIC may respond to a matter before it rather than on the matter itself.  Section 829 is a hybrid.  To the extent that it confers power to make orders relating to breaches of a securities law it addresses response.  However, it still addresses contravention by conferring power on ASIC to determine whether there has been a contravention and by identifying contravening conduct.

53                  Accordingly, subs 998(1) of the Law addresses subject matter or contravention and s 93AA of the Act addresses response.  Section 829 of the Law addresses both.  One ordinarily would not expect powers of review of administrative decisions to be conferred by reference to provisions concerned exclusively with response. This is because it is generally the subject matter that will possess the characteristics that make review appropriate.  There may be cases in which the legislature intends to confer a power to review response independently of the subject matter, but I think they must be rare.

54                  If the legislature had conferred a power on the Tribunal to review a decision under s 93AA then in a range of matters the Tribunal might have been able to reconsider the appropriateness of an undertaking without having power to reconsider the underlying substance.  It is unlikely that the legislature would intend such a result except in a special case.  It is not surprising, therefore, that s 93AA is not one of the sections identified as subject to review.

55                  It is accepted in the present case that the Tribunal does have power to reconsider the substance of ASIC's decision.  It is accepted that ASIC could have decided that the giving of an undertaking under s 93AA was appropriate.  It is said, however, that the Tribunal had no such power.  It must follow that if ASIC had decided that an undertaking was appropriate the Tribunal could not have interfered with that part of the decision.  That would be a surprising result.

56                  It follows that ASIC’s argument approaches the question from the wrong perspective.  The question is not whether s 93AA is the subject of an express right of appeal, but, first, whether the Tribunal has jurisdiction over the relevant decision-making process, and, secondly, if it does, whether ASIC could have done what the Tribunal proposes to do.  The Tribunal had jurisdiction, pursuant to s 1317B of the Law, with respect to the present decision-making process.  Once it had that jurisdiction it had, pursuant to s 43 of the Act, “all the powers and discretions” of the original decision-maker, of ASIC.  Consequently, it could exercise all of the powers of ASIC to respond, including the power to accept an undertaking under s 93AA of the ASIC Act.  Merkel J was correct in dismissing the appeal from the Tribunal under s 44 of the Act.

57                  Arguments relating to the jurisdiction of the Tribunal such as those presented in this matter are not new.  In Re Control Investments Pty Ltd and Australian Broadcasting Tribunal (No 2) (1981) 3 ALD 88 at92 President Davies J said of s 43(1) of the Act:

“...[T]he provision "For the purpose of reviewing a decision,  the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision . . ."  is not concerned to confer upon the Tribunal authority to limit its function but rather to confer upon it an amplitude of powers so that the Tribunal may exercise,  if it is convenient and useful to do so, not only the decision-making power upon which the decision-maker relied,  but all relevant powers and discretions which were conferred by the enactment upon the decision-maker. The provision extends the authority of the Tribunal so that it may more adequately exercise its function of reviewing on the merits the subject decision.”

58                  That statement was referred to by a Full Court of this Court (Lockhart, Wilcox and Burchett JJ) in Fletcher v Federal Commissioner of Taxation (1988) 19 FCR 442 at 452 where it was held that the Tribunal could exercise a discretion conferred upon the Commissioner of Taxation by s 177F in Part IVA of the Income Tax Assessment Act 1936 (Cth) when reviewing a decision under s 186 of that Act.  Both decisions were endorsed by Kenny J in Secretary, Department of Employment, Education, Training and Youth Affairs v MacKay (1998) 58 ALD 130.  In Secretary, Department of Social Security v Hodgson (1992) 37 FCR 32 at 40, Hill J put it this way:

"Of course there must be an association between the power to be exercised by the Tribunal and the decision under review, but that association is to be found in the restriction of the grant of power in s 43(1) to the purpose of the Tribunal's review.  The test is one of relevance rather than dependence.  Where the exercise of a power or discretion is relevant to the making of the decision under review then, if requested, the Tribunal may exercise the discretion.  The Tribunal is, like the Taxation Boards of Review discussed in Jolly v Commissioner of Taxation (Cth) (1935) 53 CLR 206 at 214, "another executive body in an administrative hierarchy".  Where its jurisdiction is enlivened by an application to review an administrative decision it exists to do again, within the limits of the review, that which the decision-maker was entrusted to do."

See also Kerslake v Repatriation Commission (1996) 40 ALD 547 at 551 per Heerey J.  These observations apply in the present appeal.

59                  The appellant has relied upon some observations made by the Tribunal (President O'Connor J, Members Gillham and Elsum) in Re BHP Petroleum Pty Ltd and Others and Minister for Resources (1993) 30 ALD 173 at 178.  In that case the Minister for Resources had refused an application for a certificate.  In the Tribunal it appeared that the applicant had failed to comply with a mandatory condition precedent.  Although the failure could have been rectified, by the time the matter came before the Tribunal, it was too late.  However, the Minister could have acted on his own volition, pursuant to another provision, to issue a certificate.  Properly analysed that was a case in which the jurisdiction of the Tribunal was not enlivened because of the failure to comply with the mandatory condition precedent.  Lacking jurisdiction, the Tribunal had no power to seize itself with jurisdiction in the way the Minister might have been able to.  Adopting the above analysis the Tribunal lacked jurisdiction in the subject matter because the condition precedent had not been complied with and jurisdiction could not be conferred by a provision relating to remedies.  It is to be noted that the decision of the Tribunal was, in any event, upset on appeal because the Full Federal Court (Jenkinson, Beaumont and Heerey JJ) found that the condition precedent had been complied with (BHP Petroleum (Timor Sea) Pty Ltd and Others v Minister for Resources (1994) 49 FCR 155).

60                  The respondent also relied upon the decision of Finn J in the Federal Court in Comcare v Burton (1998) 157 ALR 522.  It is to be noted that that decision was upheld on appeal (Lees v Comcare (1999) 56 ALD 84). That was also a jurisdiction case.  Finn J pointed out that s 43(1) of the Act cannot be a source of jurisdiction.  In this matter the Tribunal addressed the same subject matter as had been addressed by ASIC.  The Tribunal did not come to the question of undertaking as part of its examination of the subject matter but as part of its consideration of penalty.  Once it is accepted that the Tribunal had jurisdiction over the subject matter Burton (Lees) supports the proposition that it had available to it all the powers and discretions available to the decision-maker.

61                  The appeal must be dismissed with costs.

Associate:

Dated:              23 December 2003