FEDERAL COURT OF AUSTRALIA

Kamha v Australian Prudential Regulation Authority [2005] FCAFC 248

ADMINISTRATIVE LAW – judicial review of a decision by the Australian Prudential Regulation Authority to disqualify a person from being or acting in various capacities in the insurance industry – exercise by the Court of its discretion to grant relief under the Administrative Decisions (Judicial Review) Act

CONSTITUTIONAL LAW – whether the power to disqualify persons from being or acting in various capacities in the insurance industry contained in the Insurance Act may only be exercised by a Court constituted under Chapter III of the Constitution

INSURANCE – disqualification from being or acting in various capacities in the insurance industry under s25A of the Insurance Act 1973 (Cth)

Constitution of the Commonwealth of Australia s51(xiv) and Chapter III

Acts Interpretation Act 1901 (Cth) s15AA

Administrative Appeals Tribunal Act 1975 (Cth) ss3(3), 41

Administrative Decisions (Judicial Review) Act 1977 (Cth) ss3(1), 5(1), 10(1), 10(2)(b)(ii), 16

Australian Prudential Regulation Authority Act 1998 (Cth) ss7, 8, 9

Insurance Act 1973 (Cth) ss2A, 3, 23, 24, 25, 25A, 26, 27, 32, 44, 63, 126

Newcastle City Council v GIO General Ltd (1997) 191 CLR 85

Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 218 CLR 273

Baxter v Ah Way (1909) 8 CLR 626

Herald & Weekly Times Limited v The Commonwealth (1966) 115 CLR 418

Insurance Commissioner v Associated Dominion Assurance Pty Ltd (1953) 89 CLR 78

R v Kirby; Ex parte Boilermakers Society of Australia (1956) 94 CLR 254

Precision Data Holdings Ltd v Wills (1991) 173 CLR 167

Police Service Board v Morris & Martin (1985) 156 CLR 397

Re Woolley; Ex parte Applicants M276/2003 (2004) 210 ALR 369

Law Society of New South Wales v Foreman (1994) 34 NSWLR 408

Djalic v Minister for Immigration & Multicultural & Indigenous Affairs (2004) 206 ALR 488

Tuncok v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 172

ASHRAF IBRAHIM HELMY KAMHA v AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY & ANOR

NSD738 OF 2005

AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY & ANOR v ASHRAF IBRAHIM HELM KAMHA

NSD742 OF 2005

EMMETT, ALLSOP & GRAHAM JJ

SYDNEY

30 NOVEMBER 2005

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

THE COURT ORDERS THAT:

1.      The appeal be allowed.

2.      Orders 3 and 4 made by Justice Gyles on 27 April 2005 be set aside.

3.      The matter be remitted to Justice Gyles for reconsideration.

4.      The Appellant’s costs of his appeal be his costs in the proceeding.

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

THE COURT ORDERS THAT:

1.      The appeal be allowed.

2.      Orders 1, 2 and 4 made by Justice Gyles on 27 April 2005 be set aside.

3.      The matter be remitted to Justice Gyles for reconsideration.

4.      The Respondent pay the Appellants’ costs of their 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

NSD738 OF 2005

NSD742 OF 2005

REASONS FOR JUDGMENT

1                     These two appeals are concerned with s 25A of the Insurance Act 1973 (Cth) (‘the Insurance Act’).  Section 25A provides that Australian Prudential Regulation Authority (‘APRA’) may disqualify a person if it is satisfied that the person is not a fit and proper person to be, or to act as, a director or senior manager of a general insurer, a senior manager or agent in Australia of a foreign general insurer or a director or senior manager of a non-operating holding company (‘NOHC’).  Dr Darryl Roberts, a delegate of APRA, was satisfied that Mr Ashraf Ibrahim Helmy Kamha (‘Mr Kamha’) is not a fit and proper person to be or to act in such a capacity and decided to disqualify him pursuant to s 25A.  Mr Kamha claims that the decisions of Dr Roberts to be so satisfied and to disqualify him should be quashed on various grounds, including denial of procedural fairness, excess of power and unreasonableness. 

2                     A judge of the Court set aside the decision to disqualify Mr Kamha but declined to grant further relief claimed by Mr Kamha in respect of the decision to be satisfied.  Appeals have been brought by Mr Kamha, from the orders refusing further relief, and by APRA and Dr Roberts, from the orders setting aside the decision to disqualify. 

STATUTORY FRAMEWORK

3                     APRA is established by s 7 of the Australian Prudential Regulation Authority Act 1998 (Cth) (‘the APRA Act’).  Section 8(1) of the APRA Act provides that APRA is established, inter alia, for the purpose of regulating bodies in the financial sector in accordance with other laws of the Commonwealth that provide for prudential regulation and for developing the administrative practices and procedures to be applied in performing that regulatory role.  Section 9 provides that APRA’s functions include those conferred on it by the APRA Act or by any other law of the Commonwealth.  Section 8(1) of the Insurance Act gives APRA the general administration of that Act.

4                     Section 2A of the Insurance Act provides that its main object is to protect the interests of policy holders and prospective policy holders under insurance policies issued by general insurers and Lloyd’s underwriters in ways that are consistent with the continued development of a viable, competitive and innovative insurance industry.  The Insurance Act seeks to achieve that object by:

·        requiring general insurers and the directors and senior management of general insurers to meet certain suitability requirements;

·        imposing primary responsibility for protecting the interests of policy holders on the directors and senior management of general insurers;

·        imposing on general insurers requirements to promote prudent management of their insurance business;

·        providing for the prudential supervision of general insurers by APRA.

5                     Section 24(1) of the Insurance Act provides, relevantly, that a disqualified personmust not be or act as:

`‘(a)     a director or senior manager of a general insurer (other than a foreign general insurer); or

 (b)      a senior manager, or agent in Australia for the purpose of section 118, of a foreign general insurer; or

 (c)       a director or senior manager of an authorised NOHC.’

6                     Under s 24(4) a body corporate referred to in s 24(1) must not allow a disqualified person to be or act as a director, senior manager or agent of that body corporate.  Under s 25(1)(f), a person is a disqualified person if, at any time, inter alia, APRA has disqualified the person under s 25A.

7                     Section 25A of the Insurance Act relevantly provides as follows:

‘(1)      APRA may disqualify a person if it is satisfied that the person is not a fit and proper person to be or to act as someone referred to in paragraph 24(1)(a), (b) or (c).

 (2)      A disqualification takes effect on the day on which it is made.

 (3)      …

 (4)      APRA must give the person written notice of a disqualification, revocation of a disqualification or a refusal to revoke a disqualification.

 (5)      As soon as practicable after a notice is given to a person under subsection (4), APRA must cause particulars of the disqualification, revocation or refusal  to which the notice relates:

(a)       to be given:

(i)        if the person is, or is acting as, a person referred to in paragraph 24(1)(a) – to the general insurer concerned; or

(ii)       if the person is, or is acting as, a person referred to in paragraph 24(1)(b) – to the foreign general insurer concerned; or

(iii)      if the person is, or is acting as, a person referred to in paragraph 24(1)(c) – to the authorised NOHC; and

(b)       to be published in the Gazette.

(6)     Part VI applies to a disqualification under this section or to a refusal to revoke such a disqualification.’’

8                     Section 26(1) provides that, despite s 25, APRA may determine that a person is not a disqualified person.  APRA may do so on its own initiative or on the application of the person.  However, under s 26(2), APRA may only make such a determination if it is satisfied that the person is highly unlikely to be a prudential risk to any general insurer or authorised NOHC. 

9                     Under s 27(2), APRA may direct that a general insurer or NOHC remove a person who is a director, senior manager or agent in Australia of that body from that position if APRA is satisfied that the person is a disqualified person or does not meet one or more of the criteria for fitness and propriety set out in a prudential standard determined by APRA under s 32.  Section 32 provides that APRA may determine prudential standards relating to prudential matters that must be complied with by all general insurers and NOHCs. 

10                  Section 63 of the Insurance Act, which is in Part VI, deals with the review of certain decisions under the Insurance Act.  Under s 63(2), a person affected by any reviewable decision of APRA, who is dissatisfied with the decision, may, in the manner specified in that section, request APRA to reconsider the decision.  A reviewable decision of APRA is a decision of APRA to which Part VI applies, under a provision such as s 25A(6).  A person affected by a reviewable decision of APRA is, relevantly, the person in relation to whom the decision was made. 

11                  The word ‘decision’ is given the same meaning in the Insurance Act as in the Administrative Appeals Tribunal Act 1975 (Cth) (‘the AAT Act’).  Under s 3(3) of the AAT Act, ‘decision’ includes:

‘(a)      making, suspending, revoking or refusing to make an order or determination;

 (b)      giving, suspending, revoking or refusing to give a certificate, direction, approval, consent or permission;

 (c)       issuing, suspending, revoking or refusing to issue a licence, authority or other instrument;

 (d)      imposing a condition or restriction;

 (e)       making a declaration, demand or requirement;

 (f)       retaining, or refusing to deliver up, an article; or

 (g)      doing or refusing to do any other act or thing.’

12                  Upon receipt of a request pursuant to s 63(2) of the Insurance Act, APRA must reconsider the decision and may confirm or revoke the decision or vary the decision in such manner as APRA thinks fit.  Under s 63(7), applications may be made to the Administrative Appeals Tribunal (‘the Tribunal’) for review of decisions of APRA that have been confirmed or varied under s 63(4).  Under s 63(9), where a person makes a request under s 63(2) in respect of a reviewable decision of APRA, s 41 of the AAT Act applies as if the making of the request were the making of an application to the Tribunal for a review of that decision. 

13                  Section 41 of the AAT Act relevantly provides that the making of an application to the Tribunal for a review of a decision does not affect the operation of the decision or prevent the taking of action to implement the decision.  However, s 41(2) provides that the Tribunal may, on a request being made by a party to a proceeding before the Tribunal, make such order or orders staying or otherwise affecting the operation or implementation of the decision to which the relevant proceeding relates as the Tribunal considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review. 

14                  Section 126(1) of the Insurance Act provides that APRA may accept a written undertaking given by a person in connection with a matter in relation to which APRA has a function or power under the Insurance Act.  The person may withdraw or vary the undertaking at any time, but only with APRA’s consent.  Under s 126(3), if APRA considers that the person who gave the undertaking has breached any of its terms, APRA may apply to the Federal Court for an order under s 126(4).  Under that provision, if the Federal Court is satisfied that the person has breached a term of the undertaking, the Federal Court may make all or any of several orders, including an order directing the person to comply with the term of the undertaking. 

THE DECISIONS UNDER REVIEW

15                  Mr Kamha had been a senior executive with FAI General Insurance Company Limited (‘FAI’), a general insurer, from June 1994 to September 1998 and had been a director of that company between February 1997 and September 1998.  FAI became a subsidiary of HIH Insurance Limited (‘HIH’).

16                  HIH collapsed in March 2001 and, in September 2001, a judge of the Supreme Court of Western Australia was appointed as a Royal Commissioner to enquire into the circumstances surrounding that collapse.  The Royal Commissioner reported in April 2003.  The report touched on the conduct of Mr Kamha in relation to the affairs of FAI.

17                  On 9 August 2004, a senior manager of APRA sent a letter of that date to Mr Kamha (‘the Show Cause Notice’).  The Show Cause Notice relevantly said as follows:

‘PROPOSED DISQUALIFICATION UNDER SECTION 25A

I note that you were a senior executive with FAI Insurances Limited (FAI) from June 1994 to September 1998.  You were also a director of FAI General Insurance Company Ltd in the period February 1997 to September 1998…

…I have come to the preliminary view that you are not a fit and proper person to be or to act as someone referred to in paragraph 24(1)(a), (b) or (c) of the Insurance Act…

I have, therefore, come to the preliminary view that you should be disqualified from being or acting as someone referred to in paragraph 24(1)(a), (b) or (c) of the Insurance Act, pursuant to subsection 25A(1) of the Insurance Act…

Given the above preliminary views, I propose to recommend to the appropriate delegate of [APRA] that you be disqualified pursuant to subsection 25A(1) of the Insurance Act.

…

Before I reach a final view on the above matters, you may wish to make submissions as to why APRA should not make a decision under subsection 25A(1) … to disqualify you…’

18                  On 26 August 2004 Varrasso & Associates, Mr Kamha’s solicitors, wrote to APRA requesting an extension of time to respond to the Show Cause Notice and raising the possibility of Mr Kamha’s furnishing an undertaking pursuant to s 126 of the Insurance Act.  On 30 August 2004, APRA replied to the letter from Varrasso & Associates extending the time for a response to 5 pm on 1 October 2004 and advising that any proposal to enter an undertaking should be included in Mr Kamha’s response. 

19                  On 1 October 2004, Varrasso & Associates wrote to APRA again, raising two preliminary matters in relation to the Show Cause Notice.  First, they said that the proposed disqualification was beyond APRA’s power.  Secondly, they asserted that the basis upon which APRA was proposing to act against Mr Kamha was not clear, such that he was not fairly in a position to know, and to address, the case against him.  The Australian Government Solicitor (‘AGS’) responded to that letter on behalf of APRA on 7 October 2004.  The letter ended by saying that APRA was prepared to allow Mr Kamha until 15 October 2004 to make any submissions in relation to the material and findings in the Show Cause Notice. 

20                  On 15 October 2004 Varrasso & Associates wrote to AGS.  After dealing with argumentative material in the letter of 7 October 2004 and requesting further particulars, Varrasso & Associates requested that APRA provide an undertaking, by no later than 4 pm on 18 October 2004, that it would not proceed to disqualify Mr Kamha until full and proper particulars of alleged dishonest conduct were provided and Mr Kamha had been given reasonable time to respond to those allegations.  The letter ended by threatening to seek interlocutory relief if APRA refused to provide undertakings.  AGS responded on 19 October 2004.  The letter ended by saying that, in the absence of any submission from Varrasso & Associates by close of business on 29 October 2004, APRA would proceed to determine whether it should exercise its powers under s 25A in respect of Mr Kamha. 

21                  On 29 October 2004, Varrasso & Associates wrote to AGS responding in detail to the Show Cause Notice.  The letter ended by submitting that APRA should not maintain the view expressed and should not proceed to disqualify Mr Kamha.  In addition, the letter confirmed that Mr Kamha was prepared to provide a confidential undertaking to APRA that he would not act in any of the capacities referred to in s 24(1) without giving APRA six months written notice of his intention to do so.  The letter also said that, should APRA decline to give an undertaking that it would not for a period of 14 days proceed to disqualify Mr Kamha, proceedings for interlocutory relief would be commenced. 

22                  On 1 November 2004, AGS wrote to Varrasso & Associates saying that it was not expected that APRA’s delegate would have the opportunity to consider Mr Kamha’s submissions fully and to reach a concluded view on whether or not to exercise the s 25A discretion within the ensuing seven days.  The letter went on to say:

‘It is our client’s position however that once the submissions have been fully considered, unless the delegate is of the view that procedural fairness requires further particulars or the opportunity to make further submissions, it will be appropriate to proceed to determine whether or not to exercise the powers under s 25A without further notice.’

That letter prompted an application on Mr Kamha’s behalf to the Federal Court and, on 2 November 2004, Madgwick J ordered that APRA give to Mr Kamha two clear working days’ notice of any intention to disqualify him under s 25A of the Insurance Act, once any such intention was formed. 

23                  On 5 November 2004, Varrasso & Associates sent to AGS a form of undertaking signed by Mr Kamha, whereby he undertook that he would not be or act as or seek to be or act as or agree to be or act as a director or senior manager of a general insurer, a senior manager or agent in Australia of a foreign general insurer or a director or senior manager of an authorised NOHC. 

24                  On 16 February 2005, AGS wrote to Varrasso & Associates, referring to the orders of Madgwick J on 2 November 2004 and saying that APRA’s delegate had formed the intention to exercise his powers under s 25A of the Insurance Act to disqualify Mr Kamha from holding a s 24 position.  The letter said that the delegate would proceed to disqualify Mr Kamha under s 25A on 22 February 2005.  On 17 February 2005, Varrasso & Associates requested that a statement of reasons pursuant to s 13 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (‘ADJR Act’) be provided in respect of:

• the decision that the delegate is satisfied that Mr Kamha is not a fit and proper person.
• the decision to exercise the purported discretion to disqualify under s 25A(1) of the Insurance Act.

25                  On 17 February 2005, AGS wrote to Varrasso & Associates saying, relevantly, that the delegate was satisfied that Mr Kamha was not a fit and proper person for the purposes of s 25A of the Insurance Act and had formed an intention to disqualify Mr Kamha under s 25A.  The letter also said that, while neither the delegate nor APRA would undertake not to proceed to disqualify Mr Kamha until the resolution of any proceeding brought in relation to the proposed disqualification, the delegate would not proceed to disqualify Mr Kamha before 9 am on 23 February 2005.  Enclosed with the letter of 17 February 2005 was a document entitled ‘STATEMENT OF REASONS FOR THE PROPOSED DECISION TO DISQUALIFY MR ASHRAF IBRAHIM HELMY KAMHA’ (‘the Statement of Reasons’). 

26                  The Statement of Reasons of APRA’s delegate, Dr Roberts, consists of some 144 paragraphs covering 28 pages.  The conclusions expressed in it were as follows:

‘134.    The Royal Commission heard evidence that called your honesty and integrity as a senior manager at FAI into question.  In light of this evidence, my conclusions are that you:

a)         dishonestly instructed an internal FAI actuary not to disclose certain draft valuation results to FAI’s external actuaries PricewaterhouseCoopers (PwC).  The purpose and result of your instruction was to deprive PwC of information, including data, that was material to an assessment of FAI’s liabilities as at 30 June 1997.  You knew that PwC would under-value FAI’s outstanding claims liabilities in the absence of this information.  You also knew that if FAI understated a liability, profit would in turn be overstated.  FAI’s auditors (Arthur Andersen) and the FAI Board relied upon the PwC valuation, which undervalued liabilities in the relevant portfolio, and were misled as a result.  You should have ensured that PwC was given, at the very least, the same data as that relied upon by the internal actuary.  In my view, your conduct in depriving PwC of the information contributed, in part, to the FAI group overstating its reported profit for the year ended 30 June 1997;

b)         gave instructions to an FAI officer on 2 January 1998 to effect certain reductions to CPID case estimates on Aegis.  In all the circumstances, I am satisfied that you must have known the reductions had the improper purpose of inflating FAI’s profits as at 31 December 1997, or been reckless as to whether that was the case;

c)         provided PwC with data as at 30 June 1998 in circumstances where you must have known it was inaccurate and incomplete or, alternatively, where you were reckless as to whether it was accurate and complete.  In doing so, you participated in FAI’s dishonest design of withholding critical data from PwC, knowing that PwC would undervalue FAI’s outstanding claims liabilities as a result or being reckless as to whether that would be the consequence of withholding the data.  You in turn must have known that FAI would overstate its profitability as at 30 June 1998 as a result, or were reckless as to whether that would occur.

135.     I have concluded that your conduct in relation to the above matters fell well short of what can be reasonably expected of a senior manager in your position and demonstrates a serious lack of probity and honesty on your part.  In my view, your conduct as a senior executive was so seriously lacking such as to call into question your ongoing fitness and propriety to be or to act as someone referred to in paragraph 24(1), (a),(b) or (c) of the Insurance Act.

The decision to disqualify you

136.     In determining whether to exercise my discretion to disqualify you, I have had regard to your submissions at page 13 of your letter of 29 October 2004 as to your background.  I have also had regard to the difficult family circumstances you faced during the time in which the relevant conduct took place.

137.     On 5 November 2004 you provided APRA with a signed and confidential undertaking that you would not act or seek to act in a section 24 position.  You have also advised by your letter of 12 November 2004 that you have no present involvement in the insurance industry.  In this regard, you note that you ceased to be involved with Dexta Corporation Ltd, an insurance underwriting agency, on 14 October 2004, although the company is not a general insurer within the meaning of the Act.

138.     Although you have undertaken not to hold a section 24 position, I nonetheless am of the view there is a public interest in proceeding to disqualify you for the purposes of section 25A, particularly given the concerns I have regarding your honesty and probity.

139.     Your conduct, as summarised in paragraph 134 above, contributed to FAI overstating its profit as at 31 December 1997 and as at 30 June 1998 by a very significant amount in the many millions of dollars.  You knew this would be the consequence of your conduct, or were reckless as to this consequence.  FAI’s auditors, shareholders, policyholders, regulators and HIH were misled as a result.  A director or a senior manager of a general insurer is expected to protect the interests of policyholders and shareholders:  section 2A of the Act.  You failed to protect the interests of FAI policyholders and shareholders in 1997/1998 and demonstrated a blatant disregard for their interests.

140.     In my view, the protective powers under section 25A of the Act may be exercised for the purposes of upholding the standards of honesty and probity amongst all those acting in section 24 positions in the general insurance industry.  I consider that it is appropriate to disqualify a person who has departed from the standards of honesty and probity as a means of maintaining those standards in section 24 professions.

141.     In addition, notwithstanding your undertaking of 5 November 2004, having regard to the length of your experience within the insurance industry and your age, in my view there is some prospect that you may seek to hold a section 24 position in the future unless you are disqualified.

142.     I have, therefore, come to the view that you should be disqualified from being or acting as someone referred to in paragraph 24(1)(a), (b) or (c) of the Insurance Act, pursuant to subsection 25A(1) of the Insurance Act.

143.     In reaching these views, I have carefully considered your submissions to the Royal Commission and your submissions to APRA.

…

144.     The evidence and other material I have relied upon are set out in the footnotes to this document, copies of which are provided in the compact disk.’

THE PROCEEDING IN THE FEDERAL COURT

27                  Mr Kamha commenced another proceeding in the Federal Court on 21 February 2005.  The proceeding was brought under the ADJR Act.  Under s 5(1) of the ADJR Act, a person who is aggrieved by a decision to which the ADJR Act applies may apply to the Federal Court for an order of review in respect of that decision on any one or more of the grounds set out in that section.  Under s 3(1), the ADJR Act applies to any decision of an administrative character made, proposed to be made, or required to be made under an enactment, as that term is defined in the ADJR Act.  The Insurance Act is an enactment  for the purposes of the ADJR Act. 

28                  Under s 10(1) of the ADJR Act, the rights conferred by s 5 on a person to make an application to the Federal Court in respect of a decision are in addition to, and not in derogation of, any other rights that the person has to seek a review of that decision.  Notwithstanding that provision, however, under s 10(2)(b)(ii), the Federal Court, may in its discretion, refuse to grant an application under s 5 that was made to the Court in respect of a decision, for the reason that adequate provision is made by any law, other than the ADJR Act, under which the applicant is entitled to seek a review by, inter alia, another tribunal, authority or person, of that decision. 

29                  Under s 16(1) of the ADJR Act, on an application for an order of review in respect of the decision, the Federal Court may, in its discretion, make all or any of a number of orders specified in s 16.  Thus, whether relief is to be granted under the ADJR Act by the Federal Court is in the discretion of the Court. 

30                  In the second proceeding commenced by him, Mr Kamha sought review of the following:

(a)        The decision of APRA by its delegate Dr Roberts, manifested on 16 February 2005, under s 25A(1) of the Insurance Act that it is satisfied that Mr Kamha is not a fit and proper person to be or to act as someone referred to in s 24(1) (‘the Satisfaction Decision’).

(b)        The decision of APRA by its delegate, Dr Roberts, manifested on 16 February 2005 in determining to exercise its discretion under s 25A(1) to disqualify Mr Kamha (‘the Discretionary Decision’).

(c)        The conduct of APRA by its delegate, Dr Roberts, in stating its intention to exercise the discretion referred to above (‘the Discretionary Conduct’).

(d)        The proposed decision of APRA by its delegate, Dr Roberts, being the exercise of the power under s 25A of the Insurance Act to disqualify Mr Kamha from holding a position described in s 24 of the Insurance Act (‘the Proposed Decision’).

The proceeding was heard over five days in March and early April and the primary judge published reasons for his conclusions on 22 April 2005. 

31                  In the proceeding, Mr Kamha sought to impugn the Satisfaction Decision on a number of grounds as follows:

(a)        breach of the rules of procedural fairness including:

(i)         Dr Roberts’ failure to consider all of the material put before him and relied on by Mr Kamha;

(ii)        Dr Roberts’ failure to review impartially the allegations and recommendations in the Show Cause Notice or, alternatively, reasonable apprehension of such a failure;

(iii)       Dr Roberts’ failure to respond to Mr Kamha’s submissions;

(b)        the Insurance Act does not authorise the making of the Satisfaction Decision;

(c)        the Satisfaction Decision involved an error of law;

(d)        there was no evidence or other material to justify the making of the Satisfaction Decision;

(e)        the state of satisfaction was not reached reasonably on the material before Dr Roberts;

(f)         Dr Roberts failed to take relevant considerations into account;

(g)        Dr Roberts took into account irrelevant considerations.

The primary judge did not consider any of those grounds for impugning the Satisfaction Decision.  While his Honour considered that s 10(2)(b)(ii) of the ADJR Act had no operation, because Part VI was not triggered in terms of s 25A(6) of the Insurance Act, his Honour was nevertheless of the view that there was a residual discretion in the Court under s 16(1) of the ADJR Act to refuse relief on the ground that, as soon as there was a disqualification of Mr Kamha, there would be adequate means of review both internally within APRA and by the Tribunal. 

32                  Mr Kamha also contended that the power to disqualify under s 25A applies only to a person who actually holds a position referred to in s 24(1) or, in the alternative, a person in respect of whom there is a real risk or likelihood of the person’s holding such a position in the future.  The primary judge rejected that contention. 

33                  However, the primary judge concluded that Dr Roberts had misconstrued the effect of s 25A and took into account an irrelevant consideration.  Mr Kamha contended that the discretionary decision to disqualify was influenced by a desire to punish and deter and that neither is a legitimate consideration pursuant to the Insurance Act.  His Honour was not satisfied that punishment as such could be said to have been an operative consideration and distinguished punitive effects from punitive purpose.  However, his Honour was satisfied that paragraph 140 of the Statement of Reasons reflected an intention that disqualification would have a wider impact than simply preventing Mr Kamha from being or acting in the positions referred to s 24(1).  His Honour considered that, when considered in context, the language of paragraph 140 was consistent only with the power being exercised in order to make an example of Mr Kamha to others acting in s 24(1) positions.  His Honour concluded that that purpose is not permitted by the Insurance Act. 

34                  The primary judge considered two reasons why relief might be refused, notwithstanding that his Honour concluded that an irrelevant consideration had been taken into account by Dr Roberts in making the discretionary decision.  The first possible reason was that the irrelevant consideration was not the only factor taken into account in making the discretionary decision.  His Honour rejected that reason.  The second possible reason was that there is an alternative remedy provided by Part VI of the Insurance Act. 

35                  In the course of the hearing before the primary judge, APRA applied, by notice of motion, for orders that the proceeding be dismissed or that the Court refuse to grant relief pursuant to s 10(2)(b)(ii) of the ADJR Act, or in the exercise of its discretion under s 16.  In the alternative, the notice of motion claimed orders that the application be dismissed or the Court refuse to grant the application, except in so far as the application concerned allegations that:

• the Insurance Act does not authorise the making of the relevant decision;

·        the power was exercised for a purpose other than the purpose for which the power was conferred.

The primary judge declined to make the orders sought, having regard to the doubt as to whether s 10(2)(b)(i) of the ADJR Act was engaged and since Mr Kamha’s case was not complete.

36                  After Mr Kamha’s case was complete and submissions on his behalf were completed, counsel for APRA and Dr Roberts made some general submissions in reply.  However, their counsel did not complete submissions in relation to the issues raised in connection with the attack on the Satisfaction Decision.  Significant further time would have been required in order to provide a comprehensive answer to that aspect of Mr Kamha’s case.

37                  The primary judge concluded that the satisfaction decision was not a disqualification within s 25A(2), although it was reviewable under the ADJR Act.  His Honour also considered that there was a doubt as to whether the discretionary decision was a reviewable decision, it being no more than a step along the way to disqualification, with no statutory basis or significance of itself.  His Honour considered that that point illustrated the artificiality of Mr Kamha’s position.  In any event, however, his Honour concluded that, if the discretionary decision was a reviewable decision, it also was not a disqualification as such, so as to engage s 10(2)(b) of the ADJR Act.

38                  The primary judge observed that all the complaints made by Mr Kamha about the process engaged in by Dr Roberts, whether substantive or procedural, are capable of being considered on the merits, both on reconsideration by APRA and on review by the Tribunal pursuant to s 63(7).  His Honour considered that, apart from the questions of the power to disqualify under s 25A(1) and Dr Roberts’ reasons for deciding to disqualify Mr Kamha, reconsideration by APRA and review by the Tribunal were the appropriate means of resolving Mr Kamha’s complaints about that process.

39                  The primary judge concluded that there would be no direct effect upon the present employment of Mr Kamha by reason of the proposed disqualification and the attendant publication pursuant to s 25A(5) of the fact of disqualification.  His Honour observed that there was no evidence of any likely immediate effect upon Mr Kamha’s livelihood.  The possible harm would be to his reputation, but the disqualification would be based on the public findings of the Royal Commission and, in any event, the proceeding before his Honour was held in public.

40                  His Honour also considered that it was relevant that the power to grant a stay, conferred on the Tribunal by s 41 of the AAT Act, applies immediately upon the making of a request for reconsideration by APRA pursuant to s 63(2) of the Insurance Act.  His Honour considered that that provision, which his Honour characterised as ‘unusual’, was designed to deal with the particular situation that had arisen in Mr Kamha’s case.  Indeed, counsel for APRA indicated the possibility of cooperation in applying those provisions in this case. 

41                  The primary judge also observed that the protective purpose of s 25A will often require prompt action in the public interest.  His Honour considered that that purpose could be frustrated if full scale judicial review of intermediate decisions on all grounds were to be permitted.  While it may be sensible to deal with discrete issues that, if made out, would show the process to be completely misconceived or to be infected by a serious misconception of law, it does not follow that all potential grounds of challenge should be considered.  His Honour adverted to the fact that completing the hearing and delivering judgment on all issues would take months rather than days or weeks.  In any event, his Honour considered that the remaining issues were better determined on the merits by APRA or the Tribunal rather than by a court on judicial review. 

42                  A final matter to which the primary judge had regard was his Honour’s finding as to the defect in the discretionary decision.  His Honour intended to remit the matter to APRA for reconsideration.  If the reconsideration led to the decision being reversed, the consideration of the other issues would become unnecessary.

43                  The primary judge made an order that the decision of APRA under s 25A of the Insurance Act made by its delegate, Dr Roberts, on 16 February 2005, to disqualify Mr Kamha, be set aside and the matter to which that decision relates be remitted to APRA for further consideration according to law.  However, his Honour refused to grant any relief in relation to the satisfaction decision.  His Honour ordered APRA to pay one-half of Mr Kamha’s cost of the proceeding.

44                  By notice of appeal filed on 13 May 2005, Mr Kamha appeals against the order made by the primary judge that Mr Kamha’s proceeding be dismissed without further relief and that APRA pay only half of his costs.  By notice of appeal filed on the same day, APRA appeals from the orders setting aside Dr Roberts’ decision to disqualify and remitting the matter for further consideration and the order for costs. 

THE ISSUES RAISED BY THE APPEALS

45                  Apart from the question of costs, there are three substantive questions raised by the appeals, two raised by Mr Kamha’s appeal and one raised by APRA’s appeal.  They may be briefly summarised as follows:

(a)    First, on the proper construction of s 25A, and in the circumstances before it, whether APRA had statutory authority to disqualify Mr Kamha from acting as someone referred to in s 24(1)(a), (b) or (c) of the Insurance Act and, if so, whether s 25A is a valid exercise of legislative power under s 51(xiv) of the Constitution.

(b)   Secondly, whether APRA took into account a consideration foreign to the operation of the Insurance Act (that is a legally irrelevant consideration) in coming to its decision to disqualify Mr Kamha under s 25A and, if not, whether s 25A is a valid exercise of legislative power under s 51(xiv) of the Constitution.

(c)    Thirdly, whether, as a matter of statutory construction and in the circumstances that have happened, there was available to the primary judge a discretion under s 16 of the ADJR Act not to grant relief in respect of a number of the claims of Mr Kamha and whether, if that discretion existed, the discretion was properly exercised. 

POWER TO DISQUALIFY UNDER S 25A(1)

46                  The primary argument put on behalf of Mr Kamha was that the power to disqualify under s 25A was only available in respect of someone who occupied a position referred to in s 24(1)(a),(b) or (c) at the time of the decision to disqualify.  Mr Kamha did not.  So, it was said, there was no power to disqualify him.  An alternative argument put on behalf of Mr Kamha was that the operation of s 25A was limited to circumstances where there was ‘objectively speaking’ a risk that the person in question ‘is going to occupy one of those positions’.  This objective circumstance was said to be an objective jurisdictional fact, not a matter for the view or satisfaction of APRA; thus it was a fact that the Court was obliged to consider and to make a finding upon.  It was said that, in this case, there was no such risk, as an objective fact.

47                  The limited operation of s 25A to persons who, at the time of the decision to disqualify, occupied positions referred to in s 24(1) of the Insurance Act was said to arise as a matter of construction from ss 2A, 3, 23, 24, 25, 25A, 27, 32 and 44 of the Insurance Act and s 9 of the APRA Act.  Most powerfully for this argument are the terms of s 25A(5) concerning the provision of notices of disqualification.  However, that subsection does not control the width of s 25A(1).  If someone is the subject of a disqualification under s 25A(1) and does not occupy one of the positions mention in s 24(1), there will be no occasion to notify the organisation mentioned in s 25A(5)(a)(i), (ii) and (iii).  That is reflected by the use of the word ‘if’.  Only publication in the Gazette would be required.  No violence to s 25A(5) is done by viewing the matter thus.  Furthermore, s 25A(5) requires notices to be given and published where there has been a revocation of a disqualification or a refusal to revoke.  Plainly, such notices would not be required under s 25A(5)(a) in such circumstances.  There would only be a requirement for publication in the Gazette.

48                  There would be no statutory purpose in limiting the exercise of the power to those who currently hold positions mentioned in s 24(1)(a), (b) and (c).  It would lead to the result that a person fearing disqualification could simply resign to withdraw authority from APRA to disqualify him or her.  That would be an inconvenient and improbable result, which assists in the conclusion that that is not what Parliament intended:  Newcastle City Council v GIO General Ltd (1997) 191 CLR 85, 112; and Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 218 CLR 273 at [11].  The section is not limited in the way suggested on behalf of Mr Kamha.  Any such limitation would be inconsistent with the purpose or object underlying the Insurance Act (see s 15AA of the Acts Interpretation Act 1901 (Cth)).

49                  Mr Kamha contends that, if s 25A is construed so as to enable APRA to disqualify any person, including a person who was once in a s 24(1) position, but is not in such a position at the time of the purported disqualification and is not going to be in such a position in the future, the provision would be invalid, as not being a law with respect to insurance.  He says that such a provision would lack the necessary connection with the subject matter of insurance so as to be within the power of the federal parliament and that any connection with insurance would be so insubstantial, tenuous or distant that it ought not be regarded as a law with respect to insurance or incidental to that subject matter. 

50                  Mr Kamha says that a law conferring a power to disqualify persons with no present or future connection with the insurance industry could not be regarded as regulating, operating upon or affecting the insurance industry either directly or incidentally in any real or practical sense.  He contends that, since the Insurance Act fails to prescribe any criteria for the determination of fitness and propriety within s 25A(1) and leaves the matter entirely to the discretion of APRA, the phrase ‘a person’ appearing in s 25A(1) must be read so as to require that there be a present or future connection between the person and the subject matter of insurance.

51                  Mr Kamha also argues that the object of the Insurance Act, namely, to protect the interests of policy holders, is not advanced in any relevant sense by conferring upon APRA a power to disqualify a person not presently in a s 24 position and who does not intend to be or is not likely to be in such a position in the future.  He says that a law construed as conferring such a power could not be said to be capable of being reasonably considered to be appropriate and adapted to the achievement of the designated object of the Insurance Act and, accordingly, is not a law which has a sufficient connection to insurance so as to be within the relevant power of the federal parliament. 

52                  Everything necessary to the exercise of a power is included in the grant of the power.  The power to regulate a particular area, such as insurance, includes a power to make laws that prohibit or prevent persons from engaging in activities in that area.  A law will not be beyond power merely because it casts a wide net or sets up a barrier against a possibility rather than a probability (Baxter v Ah Way (1909) 8 CLR 626 at 637 and Herald & Weekly Times Limited v The Commonwealth (1966) 115 CLR 418 at 436).

53                  The power under s 51(xiv) of the Constitution, to make laws with respect to insurance includes, for example, power to prescribe conditions upon which any person, natural or artificial, may carry on an insurance business of any kind.  It includes power to require such persons to be registered, to provide security for the due performance of their obligations, to insure persons and to maintain funds to answer those obligations (Insurance Commissioner v Associated Dominion Assurance Pty Ltd (1953) 89 CLR 78 at 87). 

54                  The power to legislate with respect to insurance will support a law prohibiting a person who is not a fit and proper person from holding a senior management position with an insurer.  The validity of such a law does not depend upon that person’s present or future subjective intention.  The power would clearly support a law prohibiting a person who is not a fit and proper person to hold a position, from holding that position, regardless of whether the person presently holds such a position or has any present intention to hold such a position in the future.  It is sufficient to bring a law within the insurance power that the law prohibits a person from holding a senior management position with an insurer, irrespective of the characteristics of the person so prohibited.  The validity of a provision such as s 25A does not depend upon whether a person disqualified has acted in a s 24 position in the past or whether the person intends to act in a s 24 position in the future.

55                  In any event, there is a clear nexus between the prohibition of Mr Kamha and the insurance power.  The alleged conduct upon which the Satisfaction Decision was based took place while Mr Kamha was holding a s 24 position.  Further, Mr Roberts concluded that there was some prospect that Mr Kamha may seek to hold such a position in the future. 

56                  Mr Kamha’s contention that the relevant provisions of the Insurance Act are not laws with respect to insurance as contemplated by s 51(xiv) of the Constitution should be rejected.

REASONS FOR DECIDING TO DISQUALIFY

57                  This issue involves a factual and a legal aspect.  The primary judge found as a fact that paragraph 140 of the Statement of Reasons, in its context, evidenced a purpose of Mr Roberts to make an example of Mr Kamha to others acting in ‘s.24 positions’.  APRA says that this factual conclusion was wrong.  The legal aspect of the issue is whether, assuming the primary judge to be correct in his factual conclusion, his Honour was correct in concluding that this was an irrelevant consideration or purpose.

58                  The relevant findings of the primary judge were in [24] of his Honour’s reasons:

‘There is no express reference to punishment or deterrence in the reasons. Indeed, the powers are described as `protective´. I am not satisfied that punishment as such can be said to have been an operative consideration. Punitive effects are to be distinguished from a punitive purpose. However, I am satisfied that par 140 of the reasons reflects an intention that disqualification would have a wider impact than simply preventing the person disqualified from being or acting in the positions referred to in s 24(1). That more limited purpose is dealt with as, in effect, a separate topic in par 141. It seems to me that, when understood in context, the language of par 140 is consistent only with the power being exercised in order to make an example of the party disqualified to others acting in s 24 positions. The question is whether that purpose is permitted by the statute. Attributing a label such as deterrence or punishment may illuminate but will not answer that question.’

59                  The relevant finding was of the purpose of Dr Roberts.  Dr Roberts did not give evidence.

60                  It was submitted, on behalf of APRA, that the finding involved a misreading of the Statement of Reasons.  The issue is whether the finding as to Dr Roberts’ purpose was erroneous.  To this question, obviously, the words used by Dr Roberts are important.  But the question is not simply what those words mean?.

61                  An important aspect of the context of paragraphs 138 to 141 of the Statement of Reasons was the policy of APRA on the release of media statements.  This policy document, amongst other things, discussed the relative merits of accepting enforceable undertakings which Mr Kamha offered or proceeding to formal disqualification.  The policy document stated the following:

‘Issue

A policy position needs to be taken on:

A.        (1)   Whether APRA should offer Enforceable Undertakings (“EUs”) to any of the persons whose fitness and propriety is to be reviewed, following the release of the HIH Royal Commission report; and if so,

(2)   To which ones.

(3)   A subsidiary question is whether, if EUs are to be offered, APRA should publicise individual enforceable undertakings, refrain from publicising them at all, or simply issue media statements outlining the number and type of EUs entered into without providing details of the individuals involved.

APRA also needs to consider, for those individuals whom APRA has disqualified rather than accepted EUs from;

A.        Whether these disqualification actions should in general be publicised; and

B.         If so, the appropriate time to issue a media statement announcing the disqualification of any individual disqualified; and

C.        How to ensure that information about disqualification action is made known to those who need to know.

…

…[W]here APRA has real reason to doubt the honesty of any of these individuals, it may not be appropriate to accept an undertaking. On the contrary, it may be reasonable to take the approach of disqualifying these persons and putting the public (and the industry, in particular) on notice of the fact.  To the extent that the general insurance industry is not informed that there is an impediment (in the form of an enforceable undertaking) to a particular person working in the industry, there is scope for a dishonest person to seek and accept work in the industry despite their having given an undertaking to APRA not to do so.  (While the Prudential Standards provide some safeguard they cannot be relied upon to ensure that no person who has given an enforceable undertaking accepts a senior management or director position. Prudential Standard GPS 220-7 provides that insurers must provide APRA with details of all newly appointed directors and senior management staff within 14 days of their appointment (paras 19 and 22).  However, there is a time lag inherent in this process; there is a risk that insurers will fail to provide this notice from time to time; and there is a risk that the APRA supervisor responsible for the general insurer in question fails to identify the fact that a person nominated has given an enforceable undertaking.)   In such cases, it would appear more appropriate to pursue formal disqualification action under the Act, and to inform the industry not only by a notice in the Commonwealth Gazette (where that is required by the Act), but by media release.

…

Disqualifications do not prevent the disqualified person working again in the general insurance industry.  For example, where persons are disqualified under s 25A of the Act, the disqualification will prevent the person working as a ‘director or senior manager’ of a general insurer or NOHC, or as a senior manager or agent in Australia of a foreign general insurer.  It will still be possible for the person to undertake a more junior role within a general insurer, NOHC or foreign general insurer or to work as a consultant to a general insurer.  While this is clearly a result intended by the Act, it seems undesirable that general insurers, NOHCs or foreign general insurers might find themselves in the position of employing disqualified persons without being aware of the disqualification. While s.25A requires that a disqualification under that provision be notified in the Commonwealth Gazette, not all decisions under the Act are required to be notified.  Moreover, the circulation of the Commonwealth Gazette is, in practical terms, limited.  For this reason, it seems desirable that APRA routinely publicise by way of media release any disqualification action it takes under the Act, unless there are (in a particular case) exceptional reasons why publication is unnecessary or undesirable.’

[emphasis added]

62                  It is unnecessary to determine whether all aspects of the matters referred to in the policy document are appropriate considerations.  It is sufficient, for present purposes, to appreciate that APRA considered that the publication of the circumstances of disqualification by media release as well as by the Gazette was appropriate.  Set against this background, and the content of paragraph 138 of the Statement of Reasons, the expressions of view in paragraph 140 of the reasons that the standards of honesty and probity should be upheld ‘amongst all those acting in section 24 positions’ and the disqualification being a ‘means of maintaining those standards in section 24 professions’, reflect a purpose of publication of the disqualification to ensure the ‘section 24 professions’ understood the consequences of a failure to meet the standards referred to.

63                  The primary judge used language of ‘stigmatism of the individual as an example to others’ and a ‘policy of denunciation’.  These are ways of expressing the matter.  A preferable way is to express it by saying that the decision-maker saw the protection of the public as encompassing the maintenance of standards of honesty by ensuring that those in the insurance industry understand the consequences of failure to meet those standards.  The difference is a matter of expression, and not of substance.  The attack on the primary judge’s finding of fact fails.  Thus understood, that aspect of the purpose of APRA was protective.  As to the legitimacy of the purpose, the issue is whether a consideration of the kind referred to above is excluded from Dr Roberts’ consideration by the terms of the legislation.  It is true that there is no regime in the Insurance Act for the publication of reasons. 

64                  However, it was not submitted that it was unlawful for APRA to explain its conduct and the reasons therefore to the public.  The Insurance Act does not make legally irrelevant, in the advancement of the protection of the public by the prudential regulation of the insurance industry, the consideration that the primary judge found to have partly motivated Dr Roberts – to disqualify a man found to be dishonest in order to make clear to those in the profession the consequences of failure to meet standards of honesty and probity.  Therefore, while the attack by APRA on the factual finding of the primary judge should be rejected, his Honour erred in concluding that Dr Roberts thereby took into account a legally irrelevant consideration. 

65                  Mr Kamha also contends that, in so far as s 25A empowers APRA to disqualify Mr Kamha as a punishment or penalty for his past conduct, the provision is invalid as conferring judicial power on APRA.  He says that the considerations taken into account by Dr Roberts in reaching his decision confirm that APRA would be imposing punishment upon Mr Kamha.  For example, the factors taken into account concerning Mr Kamha’s background and difficult family circumstances are consistent with a process usually undertaken by criminal courts in sentencing offenders.  Such matters would not be relevant if Mr Kamha’s disqualification was purely for protective purposes.  Similarly, Dr Roberts’ reliance upon the seriousness of Mr Kamha’s alleged conduct as a factor justifying disqualification is said to be reflective of the process of punishment.  Finally, the punitive nature of the disqualification is said to follow from the fact that Mr Kamha is not in or acting in a s 24 position, has no intention of being in such a position in the future and has offered APRA a legally enforceable undertaking that, if accepted, would preclude him from ever doing so again without APRA’s consent.

66                  Mr Kamha also contends that, if s 25A(1) is construed as empowering APRA to disqualify a person who is not actually acting in a s 24 position and has no present intention of doing so, it would constitute the exercise of judicial power in so far as it would purport to confer power to punish or penalise past wrong doings by disqualifying an individual from a whole field of employment.  Mr Kamha says such a power is exercisable only by a court constituted under Chapter III of the Constitution.

67                  The grants of legislative power contained in s 51 of the Constitution do not permit the conferral of the judicial power of the Commonwealth upon anyone other than a justice under Chapter III of the Constitution (R v Kirby; Ex parte Boilermakers Society of Australia (1956) 94 CLR 254).  If s 25A authorises the exercise of judicial power by APRA, it is beyond the power of the federal parliament and, therefore, invalid.  The question is whether APRA’s enquiry and determination that Mr Kamha should be disqualified from being in or acting in a s 24(1) position can properly be characterised as involving the exercise of judicial power.

68                  Clearly enough, the exercise by APRA of its discretion under s 25A(1) of the Insurance Act may entail the making of a judgment about conduct.  However, the question is whether that function is properly to be characterised as judicial or administrative when performed by a body such as APRA.  A significant factor in determining that question is the object of the making of the judgment.  If the object is to resolve a dispute about the existing rights and obligations of parties, by determining what those rights and obligations are, the power may properly be characterised as judicial.  If, on the other hand, the object is to determine what legal rights and obligations  should be created, the function is more properly to be characterised as administrative (Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 189).

69                  A person other than a Court constituted under Chapter III of the Constitution may be empowered or required to make determinations of fact for the purpose of exercising administrative, executive or legislative powers (Precision Data at 189-190).  The fact that the exercise of such a power may have a punitive effect, while not irrelevant, is not determinative of the character of the power exercised.  Punishment, in the sense of the inflicting of involuntary hardship or detriment by the State, is not an exclusively judicial function (Re Woolley; Ex parte Applicants M276/2003 (2004)  210 ALR 369 at [17]).

70                  The object of Dr Roberts, and APRA, in making a judgment as to whether Mr Kamha’s conduct entailed dishonesty, was to determine whether he should, in the future, have the right to act in a s 24(1) position.  That judgment would be made in the context of APRA’s role as regulator of the insurance industry and in the furtherance of the objects of the Insurance Act. 

71                  APRA’s functions under the Insurance Act may properly be likened to the administration of a licensing regime.  Under that regime, a body corporate may apply to APRA for authorisation to carry on insurance business where it would an offence to do so without such authorisation.  Individuals are not required to be authorised but may be disqualified, either automatically under s 25, or by reason of the exercise of discretion under s 25A.

72                  The power in question is a discretionary one to be exercised in circumstances where there are no criteria for its exercise laid down in the Insurance Act.  The exercise of the power does not involve an adjudication between disputants but involves the imposition of a disability on an individual as distinct from the determination of existing rights.  The power is neither a power that is inherently judicial in character nor a power with a character that has historically been exercised by courts of law. 

73                  While punishment of a criminal offence is the exercise of judicial power, the imposition of disciplinary penalties does not necessarily entail the exercise of judicial power (Police Service Board v Morris & Martin (1985) 156 CLR 397 at 403 and 407).  Disciplinary jurisdiction is significantly protective and does not involve a punitive element in the nature of the punishment of a criminal offence.  Jurisdiction in disciplinary matters is exercised to protect the public, not to punish the person disciplined.  The object of protection of the public also includes deterring others who might be tempted to fall short of the relevant standards of conduct. 

74                  The public must be able to repose confidence in the senior management of general insurers.  An element of deterrence is assurance to the public that lapses in the conduct of senior managers will not be passed over lightly or lightly put aside (see, for example, Law Society of New South Wales v Foreman (1994) 34 NSWLR 408).  APRA can validly take into account the deterrent effect of a disqualification under s 25A without rendering the power to disqualify the exercise of judicial power (see Djalic v Minister for Immigration & Multicultural & Indigenous Affairs (2004) 206 ALR 488 at [75]-[76] and Tuncok v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 172 at [42]-[44]).

75                  The power exercised or threatened to be exercised by Dr Roberts and APRA is not the exercise of judicial power.  Dr Roberts did not take into account a legally irrelevant consideration.  APRA’s appeal concerning the setting aside by the primary judge of the Discretionary Decision should be allowed.

DISCRETION TO REFUSE RELIEF

76                  The third issue concerned the approach that the primary judge took to the claims made by Mr Kamha.  Having concluded that one of the considerations taken into account by Dr Roberts in deciding to exercise the power to disqualify Mr Kamha was legally irrelevant, the primary judge set aside the decision to disqualify Mr Kamha.  His Honour did not proceed to deal with the attack on the satisfaction decision.  That attack, contained in the further amended application, was based on an asserted failure to accord procedural fairness, bias, an absence of evidence or material to justify making the decision, the reaching of the state of satisfaction unreasonably, the failure to take into account relevant considerations and the taking into account of irrelevant considerations. 

77                  The primary judge purported to exercise a discretion under s 16 of the ADJR Act for a number of reasons, including the proximate availability of full administrative merits review.  It was submitted on behalf of Mr Kamha that, because of the terms and operation of s 10(2)(b)(ii) of the ADJR Act, in the circumstances here there was no discretion in the Court to refuse to hear those complaints.  Also, it was said that if there were such a discretion, it miscarried. 

78                  The primary judge did not exercise the discretion provided for by s 10(2)(b)(ii) of the ADJR Act.  It was argued that in the circumstances where s 10(2)(b)(ii) did not apply (for the reasons referred to below) there was no room for the exercise of any discretion (whether arising from s 16 of the ADJR Act, or otherwise) to decline to exercise the judicial power of the Commonwealth to quell the controversy raised by the claims concerning the satisfaction decision. 

79                  In the ordinary course, a decision to disqualify and any act of disqualification would take place virtually instantaneously:  once a decision to disqualify had been made, the decision maker would manifest the decision in some way that would constitute the act of disqualification.  While there is no requirement under the Insurance Act for a disqualification to be evidenced in writing, one would expect that good practice would require a written record of an act of disqualification.

80                  While the Statement of Reasons is expressed to be Reasons for the proposed decision to disqualify, it is clear enough that Mr Roberts made a decision to disqualify.  The Statement of Reasons might more accurately be referred to, or described as, reasons for proposed disqualification. 

81                  The language of s 25A(2) contemplates that an act of disqualification is something that can be ‘made’, since a disqualification is to take effect ‘on the day on which it is made’.  Under s 25A(6), Part VI applies ‘to a disqualification’ under s 25A.  However, APRA and Dr Roberts accept that there has not to date been any disqualification of Mr Kamha as such.  The proceeding has been conducted by both parties on the basis that Part VI of the Insurance Act was not enlivened by any of the steps that have been taken to date.  That is to say, while there was a decision to disqualify, Part VI does not apply to a decision to disqualify.  That is the basis upon which the primary judge made orders, in so far as his Honour ordered that the decision to disqualify Mr Kamha be set aside. 

82                  Once it is accepted that the act of disqualification is a separate juristic act following the making of a decision to disqualify, the distinction is a valid one.  It may be that the making of the decision to disqualify is a subjective process in the mind of the decision maker, however it may be evidenced.  The act of disqualification, on the other hand, must be manifested objectively by some conduct on the part of the decision maker, such as saying, either orally or in writing, ‘I hereby disqualify X’ or ‘X is hereby disqualified’.

83                  Whatever the position may be, at the time of commencement of the proceeding, there was no provision made by any law, other than the ADJR Act, under which Mr Kamha could seek review, within the meaning of s 10(2)(b)(ii), of either the satisfaction decision or the discretionary decision.  On the other hand, a right to seek such a review would have arisen the moment that Dr Roberts gave effect to his decision to disqualify, by manifesting disqualification in some fashion.  The only reason why no disqualification was ‘made’ is that Mr Kamha commenced this proceeding, having previously obtained the order from Madgwick J that APRA give two clear working days notice of any intention to disqualify.  It is in that context that one must examine the question of whether the primary judge had a discretion to decline relief and, if so, whether he exercised that discretion properly. 

84                  The approach of the primary judge was as follows: though there was no disqualification yet and though Part VI of the Act did not yet apply, it would upon disqualification; there was no prejudice to Mr Kamha awaiting merits review if, on a reconsidered exercise of discretion, disqualification took place; there was full merits review in those circumstances, including the opportunity to apply to the Tribunal (with the possible co-operation of APRA) for a stay of the disqualification; the desirability of the exhaustion, as quickly as possible, of the full administrative procedure before intervention of judicial review; and the possible irrelevance of the existing state of satisfaction given that upon reassessment the decision to disqualify might not be made. 

85                  The conclusion that there was no detrimental effect on Mr Kamha’s livelihood might be debateable.  However, what has not yet occurred is an act of the Commonwealth Executive disqualifying Mr Kamha from taking certain positions for dishonesty found by the Commonwealth Executive.  It is true that Mr Kamha will, upon that act occurring, have two levels of merits appeal.  It is true that the operation of the disqualification may be stayed.  But he will be subject to that status (though perhaps suspended) by reason of his found dishonesty and lack of propriety and hence lack of fitness and propriety within the meaning of s 25A(1).  That may be a matter of prejudice, even if there has been a degree of publicity already about this case.  As yet the Commonwealth has not acted to disqualify him.  On his case, it was not open for that finding to be made.  He said that APRA, acting lawfully, not arbitrarily or capriciously, could not make that finding.  Other serious complaints are made about the approach of APRA.  While the Full Court has not heard substantive submissions from either party on that question, it can be seen as not speculative, by any means. 

86                  In circumstances where Mr Kamha will be the subject of a formal act of the Commonwealth Executive disqualifying him in the relevant respects for dishonesty, it cannot be said with certainty that he suffers no real prejudice in being required to pursue merits appeals, in particular when his not speculative complaint is that the finding of dishonesty and lack of propriety and hence lack of fitness and propriety within the meaning of s 25A(1) was simply not open on the material before APRA.  Though the finding has been made (wrongly it is asserted) it has not yet been consummated by the act of disqualification.  The act of disqualification, in the circumstances of this case, is capable of constituting a matter of serious prejudice, if Mr Kamha is correct in his claims.  Thus, he can be seen to suffer a real and non speculative risk of serious prejudice, at the least. 

87                  The grant of relief under the ADJR Act is discretionary.  That is consistent with the principles concerning the grant of relief under the prerogative writs.  There was a discretion for a court to refuse prerogative relief where an alternative remedy was available.  That principle is also the origin of the express discretion conferred by s 10(2)(b).  Nevertheless, that express discretion does not derogate from the general discretion arising under s 16.  Section 16 undoubtedly reserves a discretion to the Court as to whether to grant relief in a particular case.  While s 10(2)(b) is directed to the specific circumstance where adequate provision is made by another law for an applicant to seek review of a decision and giving rise to an express discretion to refuse relief, the absence of engagement of that provision does not preclude the exercise of the residual discretion conferred on the Court by s 16.

88                  Having regard to the conclusion reached above concerning the defect that his Honour found, his Honour’s exercise of discretion requires re-examination.  In so far as his Honour took into account the possibility that reconsideration of the disqualification decision by APRA might lead to a different result, his Honour erred.  Because his Honour erred in concluding that Dr Roberts had taken into account an irrelevant consideration, there will be no reconsideration of the disqualification decision by APRA.  Therefore, it will be necessary to consider the other matters relied on by Mr Kamha to impugn the Satisfaction Decision.

89                  The primary judge has heard all of Mr Kamha’s submissions on the attack on the satisfaction decision.  While senior counsel for Mr Kamha outlined the nature of that attack, the Full Court has not had the benefit of detailed submission on those questions.

90                  In the circumstances, while it is in no one’s interest to prolong the proceeding any further than is necessary, the appropriate course is to remit the proceeding to the primary judge for the purpose of reconsidering the exercise of the residual discretion that arises under s 16 of the ADJR Act to refuse relief, even though s 10(2)(b) is not yet engaged. 

CONCLUSION

91                  The orders of the primary judge should be set aside.  The proceeding should be remitted to his Honour for reconsideration.  The costs of the proceeding should be determined by his Honour.  Mr Kamha should pay the costs of the appeal by APRA and Dr Roberts.  Mr Kamha’s costs of his appeal should be his costs in the proceeding.

Associate:

Dated:              30 November 2005