FEDERAL COURT OF AUSTRALIA

Tarrant v Australian Securities and Investments Commission [2015] FCAFC 8

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The objection to competency be upheld in respect of questions of law 4, 11 (apart from particular (i)), 12, 15, 16 and 17 and orders 2, 3 (first appearing), 4 (second appearing) and 6 of the orders sought in the further amended notice of appeal and otherwise be dismissed.

3.    The appellant pay the respondent’s costs of the appeal and the notice of objection to competency as agreed or assessed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1    The appellant (Mr Tarrant) appeals from a decision of the Administrative Appeals Tribunal constituted by its President and a senior member (the AAT). The AAT dismissed Mr Tarrant’s application for review of a seven year ban from providing financial services imposed by the Australian Securities and Investments Commission (ASIC).

2    Under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act), the Court has jurisdiction to hear an appeal on a question of law from any decision made by the AAT in a proceeding. The jurisdiction of the Court to hear and determine such an appeal is provided for in s 44(3) of the AAT Act. The appeal, which is in the Court’s original jurisdiction, was heard by a Full Court following a determination by the Chief Justice under s 44(3) of the AAT Act.

Background

3    Mr Tarrant is an accountant and tax agent who was a director of Tarrants Financial Consultants Pty Limited (TFC) from its creation in 1999 and its managing director from 2006. He was also the sole authorised representative of TFC. TFC provided financial services in the form of financial product advice, primarily to retail clients. Mr Tarrant was also the director of Tarrants Finance Pty Ltd (Tarrants Finance), an associate of TFC for the purposes of s 50AAA of the Corporations Act 2001 (Cth) (the Corporations Act). These two companies were part of a larger group of companies in the Tarrant Corporate Group who provided a range of financial, taxation, accounting and legal services. At the relevant times, the Group employed approximately 70 staff, including 20-22 full-time employees. The Group had approximately 480 clients and managed approximately $173 million of funds.

4    From about March 2008 to December 2009, TFC made recommendations to its clients that they invest in Astarra Strategic Fund (ASF). ASF was a managed investment scheme comprised of overseas hedge funds and was managed by Absolute Alpha Pty Limited (AAM). AAM was directed by Mr Shawn Richard, who pleaded guilty and was convicted in 2011 of two offences of dishonest conduct in relation to financial services in contravention of s 1041G of the Corporations Act. The fraud affected ASF. All of TFC’s clients who had invested in ASF lost their investments.

5    Between 2007 and 2008, Mr Tarrant had engaged in discussions with Mr Richard about whether ASF should be included in TFC’s product lists for recommendation to TFC’s clients. Sometime in the period 2007 to 2008, ASF was added to TFC’s product list and the first investments in it by TFC clients were made in October 2008. From November 2008 to August 2009, AAM paid a total of $1,165,656.69 to Tarrants Finance. The invoices rendered by Tarrants Finance described the amounts claimed as a “marketing allowance”. In the AAT proceedings, Mr Tarrant disputed the accuracy of that description. He claimed that the amounts were compensation for increased administrative costs related to TFC’s services in switching and introducing clients to ASF. TFC disclosed these payments to its clients, but only from May 2009 onwards.

6    ASIC issued stop orders in relation to ASF in October 2009 and redemptions in ASF were frozen on 16 December 2009. On 19 March 2010, ASF was wound up by the Supreme Court of New South Wales.

7    In August 2010, TFC was placed in liquidation and its Australian Financial Services Licence (AFSL) was suspended. On 25 November 2011, a delegate of ASIC banned Mr Tarrant from providing financial services for seven years. On 30 November 2011, Mr Tarrant appealed to the AAT for a review of this decision. The hearing (which ultimately occupied ten days) commenced on 24 October 2012 and was adjourned on multiple occasions. The AAT’s reasons were published on 20 December 2013. The AAT affirmed the decision of the delegate to ban Mr Tarrant for seven years and it found that he had contravened various financial services laws.

The AAT’s reasons for decision summarised

8    The AAT noted that one of ASIC’s key functions, under s 1(2) of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act), is to strive to “promote the confident and informed participation of investors and consumers in the financial system.”

9    The AAT set out the material legislation regulating the provision of financial services advice at the relevant time. It noted specific provisions in both Pt 7.6 of Ch 7 of the Corporations Act regarding the licensing regime and in Pt 7.7 of the Corporations Act regarding statutory safeguards for retail clients.

10    The AAT noted that s 920A provided the power for ASIC to make an order disqualifying a person from providing financial services. It observed that this section was amended, effective from 27 June 2012, to broaden ASIC’s power. The AAT explained that while it could consider matters which occurred after the decision under review, it must address the same question as the initial decision-maker was required to address (and therefore the terms of s 920A at the time the banning order was made), citing Shi v Migration Agents Registration Authority [2008] HCA 31; (2008) 235 CLR 286.

11    At the time of the banning by ASIC’s delegate, s 920A provided:

ASIC’s power to make a banning order

(1)    ASIC may make a banning order against a person, by giving written notice to the person, if:

(a)    ASIC suspends or cancels an Australian financial services licence held by the person; or

(b)    the person has not complied with their obligations under section 912A; or

(ba)    ASIC has reason to believe that the person will not comply with their obligations under section 912A; or

(bb)    the person becomes an insolvent under administration; or

(c)    the person is convicted of fraud; or

(e)    the person has not complied with a financial services law; or

(f)    ASIC has reason to believe that the person will not comply with a financial services law.

(2)    However, ASIC may only make a banning order against a person after giving the person an opportunity:

(a)    to appear, or be represented, at a hearing before ASIC that takes place in private; and

(b)    to make submissions to ASIC on the matter.

12    The AAT noted that the delegate served Mr Tarrant with a notice particularising the delegate’s concerns that Mr Tarrant may not have complied with a financial services law and that he may not comply with a financial services law in the future. It then noted that Mr Tarrant was provided an opportunity to appear at a hearing before the delegate and make submissions. The delegate found that Mr Tarrant had not complied with several financial services laws. The AAT noted the delegate did not make a finding as to whether Mr Tarrant would not comply with a financial services law in the future.

13    The AAT proceeded to set out the following aspects of the financial services laws in the Corporations Act which ASIC alleged that Mr Tarrant had contravened:

(a)    the requirement to have a reasonable basis for financial advice (s 945A(1));

(b)    the requirement of the licensee or the authorised representative of the licensee (whichever is providing the product advice) to disclose information about remuneration or other benefits that might reasonably be expected to influence the advice (ss 947B(2)(d) and 947C(2)(e));

(c)    the prohibition on making false or misleading statements in respect of financial products (s 1041E(1)); and

(d)    the prohibition on misleading or deceptive conduct in respect of a financial product or service (s 1041H(1)).

14    The AAT identified the following issues as requiring determination:

(a)    What was the nature and effect of any agreement between Mr Tarrant and/or TFC and Mr Richard on behalf of AAM about the payment of a marketing allowance for investment in ASF and when was the agreement made?

(b)    Was Mr Tarrant required to disclose to clients of TFC payments made or to be paid to Tarrants Finance by AAM?

(c)    Were representations made by Mr Tarrant in statements of advice or statements of additional advice provided to clients of TFC about, inter alia, the independence of TFC, false in a material particular or materially misleading?

(d)    What representations were made by Mr Tarrant to staff of TFC in respect of ASF?

(e)    Were the representations referred to in (d) misleading or deceptive?

(f)    Did Mr Tarrant have a reasonable basis for advice given to eight TFC clients who were advised to invest in ASF?

(g)    Having regard to (a) - (f), did Mr Tarrant contravene a financial services law?

(h)    If the answer to (g) is yes, should Mr Tarrant be banned and, if so, for how long?

(i)    If the answer to (g) is no, is the Tribunal nonetheless satisfied that there is reason to believe Mr Tarrant will not comply with a financial services law?

(j)    If the answer to (i) is yes, should Mr Tarrant be banned and, if so, for how long?

15    After reviewing the evidence of key witnesses and examining the documentary evidence, the AAT made the following findings in relation to these questions. In relation to questions (a), (b) and (g), the AAT found that an agreement was made between Mr Tarrant (on behalf of TFC) and Mr Richard (on behalf of AAM) that a marketing allowance be paid to Tarrants Finance (the Marketing Allowance Agreement). The allowance was to be calculated as a percentage of the investments made in ASF by clients of TFC. The AAT found that the Marketing Allowance Agreement was made in early October 2008. Accordingly, the AAT found that payments made by AAM to Tarrants Finance from October 2008 to May 2009 were properly categorised as a marketing allowance (not as compensation for administration costs incurred by TFC, as Mr Tarrant claimed) and were required to be disclosed to investors under s 947C(2)(e) of the Corporations Act.

16    The AAT found that in each of the 20 cases identified by ASIC where Mr Tarrant did not disclose the payments in the period October 2008 - May 2009, he was in contravention of s 947C of the Corporations Act.

17    In relation to questions (c) and (g), ASIC argued before the AAT that Mr Tarrant made five misleading statements in contravention of s 1041E(1) of the Corporations Act. Three of these statements were made during the period April 2008 to December 2008 (the 2008 Statements) in 24 separate statements of advice. The relevant statements were as follows:

(a)    “Tarrants Financial Consultants Pty Limited (TFC) are independent”;

(b)    “TFC do not receive commissions from product providers”; and

(c)    “No hidden costs, no undisclosed incentives, no ‘under the counter’ deals”.

18    Mr Tarrant made the following two statements to clients during the period May 2009 to August 2009 (the 2009 Statements) in six separate statements of advice:

(1)    “I do not accept either personally or through Tarrants Financial Consultants Pty Ltd, commissions or placement fees for placing moneys in recommended investments”; and

(2)    “Soft dollar benefits, such as training, conference attendances and marketing allowances, if offered by investment houses, are not accepted by me personally or by the staff of Tarrants Financial Consultants Pty Ltd”.

19    The AAT then explained that, for a contravention of s 1041E of the Corporations Act to be established here, the following criteria must be met:

(a)    the statements must be:

(a)    shown to be false in a material particular, or materially misleading, at the time they were made; and

(b)    likely to induce persons to invest in ASF; and

(b)    Mr Tarrant must have been reckless about whether the statements were true or false or must have known (or ought reasonably to have known) the statements were false in a material particular or were materially misleading.

20    The AAT noted that 15 of the 2008 Statements were made prior to the time it had found that the Marketing Allowance Agreement was made (early October 2008). The AAT found that these 15 statements did not contravene s 1041E of the Corporations Act.

21    The AAT found that the nine remaining 2008 Statements contravened s 1041E of the Corporations Act. In relation to statements (b) and (c) of the 2008 Statements, the AAT found that they were materially misleading as they would give the impression that TFC did not receive payments or benefits from product providers. Further, the AAT reasoned that statement (a), when read with statements (b) and (c), reinforced the impression that TFC was independent from product providers. The AAT found that Mr Tarrant knew or ought to have known that the 2008 Statements were materially misleading or was reckless as to whether they were misleading when he knew Tarrants Finance was receiving the marketing allowance for investments in ASF by TFC clients from October 2008.

22    The AAT then considered the 2009 Statements and found that they were also materially misleading because, at the time they were made, Tarrants Finance was receiving the marketing allowance. The AAT found that Mr Tarrant knew the 2009 Statements were materially misleading and must have known that investors would rely on the statements. The AAT also noted that the 2009 Statements would have been likely to induce investors to accept Mr Tarrant’s recommendations, including in relation to ASF.

23    Accordingly, the AAT concluded that Mr Tarrant was in breach of s 1041E(1) of the Corporations Act in relation to a total of 15 statements of advice provided to TFC clients.

24    As to questions (d), (e) and (g), the AAT considered whether the following statements made by Mr Tarrant in presentations to TFC staff and clients were in breach of s 1041H of the Corporations Act. The initial statements were made to a staff member in mid-2008 to the effect that:

(a)    TFC did not receive commissions (Representation 1); and

(b)    TFC did not receive commissions to avoid conflict of interest (Representation 2).

25    The additional statements made (by Mr Tarrant or which were authorised by Mr Tarrant) during the period 2008 to 2009 by TFC staff to clients and potential clients were as follows:

(a)    “we are able to provide advice without being influenced by the product provider” (Representation 3);

(b)    “we are looking out for your best interests not where we will receive the biggest commissions” (Representation 4); and

(c)    “we charge the client the fee for service, not receiving commissions as is the industry standard” (Representation 5).

26    The AAT found that the statements made prior to the Marketing Allowance Agreement (in early October 2008) were not in breach of s 1041H of the Corporations Act. Accordingly, Representations 1 and 2 were not contraventions.

27    The AAT was not satisfied Representation 4 was misleading or deceptive, as there was insufficient evidence to demonstrate that either TFC or Mr Tarrant was not looking out for the clients’ best interests when making recommendations.

28    In relation to Representations 3 and 5, the AAT noted that it was irrelevant whether Mr Tarrant intended to deceive and mislead TFC clients and staff. It also observed that the investors who participated in the presentation were unsophisticated and would be more likely to be led into error by these representations, citing Australian Securities and Investments Commission v Maxwell [2006] NSWSC 1052.

29    The AAT observed that Representations 3 and 5 created the impression that TFC (and Mr Tarrant) did not receive payments from product providers and that there was no potential for conflicted advice. The AAT noted that, as an associate of TFC, Tarrants Finance was receiving a marketing allowance for investments in ASF and that TFC and Mr Tarrant received an indirect benefit through those payments. Accordingly, the AAT found that Representations 3 and 5 as made after early October 2008 were misleading or deceptive and contravened s 1041H of the Corporations Act.

30    The AAT then considered question (f), i.e. whether there was a reasonable basis for the advice provided to eight clients of TFC to invest in ASF. The AAT set out s 945A of the Corporations Act, which relevantly stated that a providing entity must only provide retail advice to a client if:

(i)    the providing entity:

    (i)    determines the relevant personal circumstances in relation to giving the advice; and

    (ii)    makes reasonable inquiries in relation to those personal circumstances; and

(ii)    having regard to information obtained from the client in relation to those personal circumstances the authorised representative has given such consideration to, and conducted such investigation of, the subject matter of the advice as is reasonable in all the circumstances; and

(iii)    the advice is appropriate to the client having regard to that conclusion and investigation.

31    The AAT then set out relevant regulations (now no longer in force) which specified factors relevant to determining whether the requirements of s 945A(1)(a) of the Corporations Act had been complied with, including the following factors specified in cl 175.85:

    potential impact of inappropriate advice on the client;

    complexity of the advice; and

    financial literacy of the client.

32    The AAT also set out cl 175.104 of the regulations, which provided inclusive requirements for determining a client’s personal circumstances where investment advice was being provided. Those non-exhaustive requirements included:

(a)    need for regular income (e.g. retirement income);

(b)    need for capital growth;

(c)    desire to minimise fees and costs;

(d)    tolerance of the risk of capital loss, especially where this is a significant possibility if the advice is followed;

(e)    tolerance of the risk that the advice (if followed) will not produce the expected benefits;

(f)    existing investment portfolio;

(g)    need to be able to readily cash-in the investment;

(h)    capacity to service any loan provided in relation to a financial product; and

(i)    tax position, social security entitlements, family commitments, employment security and expected retirement age.

33    The AAT summarised in some detail the evidence relating to these matters (which included statements of evidence made by each of the eight relevant TFC clients who were also cross-examined by Mr Tarrant’s then counsel), as well as other documentary and witness evidence (including from former TFC employees) regarding:

(a)    the advice provided to the eight clients;

(b)    whether ASF was a high risk investment product; and

(c)    the education, investment experience and investment goals of the eight clients.

34    The AAT noted that the correct test to be applied in determining whether s 945A of the Corporations Act had been contravened was comparable to the common law test which applied to advice by professional advisors. Accordingly, the AAT noted expert evidence may be relevant, citing Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1. ASIC relied on three expert reports prepared by Mr Dominic Alafaci, who had been involved in the financial services industry since 1981. After reviewing the TFC files relating to the eight relevant investors, Mr Alafaci explained in his reports why he considered that Mr Tarrant did not:

(a)    make reasonable enquiries about the personal circumstances of each of the eight clients;

(b)    determine the relevant personal circumstances of each of the eight clients in giving his advice; or

(c)    give consideration to, and conduct such investigations of, the subject matter of the advice, as a reasonable financial advisor would do in the circumstances.

35    Mr Tarrant did not attend the AAT’s resumed hearing in August 2013 (nor was he represented there). However, he filed lengthy written submissions (approximately 600 pages in length, together with 1200 pages of annexures) after the last day of the hearing (i.e. 15 August 2013). Following an objection by ASIC that the submissions sought to adduce new evidence after the oral hearing had finished, the AAT said that it had disregarded the additional statements of fact or opinion made by Mr Tarrant in these submissions. It will be necessary to describe below in more detail various procedural matters relating to Mr Tarrant’s involvement in the AAT proceedings.

36    After assessing the evidence, the AAT concluded that it was not satisfied that the advice provided to the eight clients was appropriate. Further, the AAT was not satisfied that Mr Tarrant adequately determined the personal circumstances of the eight clients or that he made reasonable inquiries in relation to their personal circumstances, as required by s 945A(1)(a) of the Corporations Act.

37    The AAT observed that Mr Tarrant “classified the eight investors as aggressive investors without properly assessing their appetite for risk”, in circumstances where the eight clients were “unsophisticated, inexperienced investors”. The AAT noted that each of the eight clients had expressed his or her hope to retire at a certain age and receive a retirement income similar to their income at the time of the advice. The AAT explained that there was “no evidence that Mr Tarrant explored the feasibility of such a goal” and, further, this goal was used as the basis for reclassifying these clients from “assertive” to “aggressive”. The AAT noted that categorisation as an “aggressive” investor within the TFC framework meant “security of capital was secondary to potential for wealth accumulation”.

38    The AAT then considered whether Mr Tarrant complied with s 945A(1)(b) of the Corporations Act. The AAT noted that it did not accept ASIC’s submission that ASF would have been identified as a “high risk” investment at the time Mr Tarrant caused ASF to be placed on the product list and recommended ASF to TFC clients. However, the AAT noted that a prudent advisor should have noticed limitations and risks associated with investments in ASF. The AAT also noted Mr Tarrant recommended that these eight clients invest over 20 per cent of their portfolio (and up to 42 per cent in six cases) in ASF and that they should borrow money to do so. In these circumstances, the AAT was not satisfied Mr Tarrant gave adequate consideration to the suitability of ASF as a significant investment for the eight clients. Further, the AAT noted that Mr Tarrant knew that the eight clients were not sophisticated investors. Accordingly, the AAT was not satisfied that he gave due consideration to the investments he was recommending, as required by s 945A(1)(b) of the Corporations Act.

39    The AAT concluded that Mr Tarrant breached s 945A in respect of the advice provided to the eight clients and that these breaches were serious, given their consequences for each client in following his advice. The AAT noted that each of the eight clients suffered significant losses.

40    The AAT summarised its findings that Mr Tarrant had breached the following provisions of the Corporations Act:

(a)    s 947C in respect of 20 statements of advice;

(b)    s 1041E(1) in respect of statements made in 15 statements of advice;

(c)    s 1041H(1) in respect of representations made to TFC staff and thereby clients of TFC from early October 2008 to May 2009; and

(d)    s 945A in respect of advice given to eight TFC clients.

41    The AAT described the breaches as significant and serious as they involved large sums of money, they affected unsophisticated retail investors and there were a series of breaches over a long period.

42    The AAT then turned to consider whether Mr Tarrant should be banned and, if so, for how long. Paragraph 380 of the AAT’s reasons for decision relates to those matters and, in view of the importance of this paragraph in the appeal, it should be set out in full:

Mr Tarrant is entitled to challenge the decision of the delegate and to seek a review of all the matters raised by ASIC but if the Tribunal finds, as it has, that Mr Tarrant has breached the Corporations Act, it is appropriate for the Tribunal to have regard to Mr Tarrant’s attitude to those breaches. This may be relevant to the question of whether there are legitimate concerns about Mr Tarrant’s compliance with financial service laws in the future and his understanding of those laws. Mr Tarrant does not say he did not understand his obligations at the time or that there was a mistake or error. The submissions previously referred to do not give the Tribunal any confidence Mr Tarrant will comply with the financial laws if he is again licensed. This impacts on the question of whether a banning order should be made and, if so, for how long.

43    The AAT observed that once it was established that a financial services law had been contravened, ASIC (and subsequently the AAT) had a discretion whether or not to make a banning order.

44    The AAT noted that Mr Tarrant had contended that ASIC’s case was “weak, opportunistic and contrary to the evidence” and that he had asked the AAT to award costs against ASIC, reinstate his AFSL (presumably TFC’s) and set aside the banning order. The AAT explained that it did not have power to award costs or to reinstate TFC’s AFSL.

45    In determining whether a banning order was appropriate and, if so, for how long, the AAT considered some of the factors set out by Santow J (as his Honour then was) in Australian Securities and Investments Commission v Adler [2002] NSWSC 483; (2002) 42 ACSR 80 (ASIC v Adler) at [50]. The AAT observed that that case related to factors to be considered in the disqualification of a director, but it added that the factors had also been considered in several disqualification cases, including Re Howarth and Australian Securities and Investments Commission [2008] AATA 278; (2008) 48 AAR 10.

46    In view of the importance to the appeal, and despite their length, it is desirable to set out in full [385] to [388] of the AAT’s reasons for decision:

385    In ASIC v Adler Santow J identified 15 factors relevant to disqualification. Taking those factors in account and applying them to the present case, the Tribunal is of the view that the following matters are relevant to the Tribunal’s consideration:

(i)    Banning orders are designed to protect the public from the harm, which includes the protection of investors;

(ii)    The banning order is protective against present and future breach;

(iii)    A banning order has a motive of personal deterrence, though it is not punitive;

(iv)    The objects of general deterrence are also sought to be achieved;

(v)    In assessing the fitness of a person to be permitted to provide financial advice, they have an understanding of their role and obligations;

(vi)    In assessing an appropriate length of prohibition, consideration has been given to the degree of seriousness of the contraventions, the propensity that the defendant may engage in similar conduct in the future and the likely harm that may be caused to the public;

(vii)    Longer periods of disqualification are reserved for cases where contraventions have been of a serious nature such as those involving dishonesty;

(viii)    It is necessary to balance the personal hardship to the defendant against the public interest and the need for protection of the public from any repeat of the conduct;

(ix)    A mitigating factor in considering a period of disqualification is the likelihood of the defendant reforming;

(x)    It is necessary to assess matters such as the character of the person, the nature of the breaches, risks to others from the continuation of the person as an authorised representative of a licensed person and the honesty and competence of the person;

(xi)    Factors which lead to the imposition of the longest periods of disqualification include large financial losses, high propensity for the person to engage in similar conduct and lack of contrition or remorse; and

(xii)    Factors which lead to the conclusion that these cases were serious though not “worst cases” resulting in disqualification from 7 to 12 years, include serious incompetence and irresponsibility, substantial loss or deliberate courses of conduct to enrich themselves at others’ expense, but with lesser degrees of dishonesty.

386    Having regard to these matters and the Tribunal’s findings of breach, the Tribunal finds a banning order is warranted and that an order of at least seven years is appropriate.

387    In this case, there have been numerous breaches of financial services laws. Those breaches have been serious and repeated. A consequence of the breaches has been significant loss to the retirement savings of investors. While there is no evidence of dishonesty, there is evidence of incompetence and negligent, if not wilful, breach. Mr Tarrant has not expressed any contrition or remorse for the wrongdoing and has sought to blame others for the losses. Specific deterrence is therefore a relevant consideration in this case. General deterrence and the importance of maintaining standards are also relevant. The protection of investors from possible future breach by Mr Tarrant but, more particularly, other advisers who may be deterred by the example of a banning order is a relevant consideration. Against this, it should be noted that Mr Tarrant will continue to suffer hardship if a banning order is imposed. He has already been banned for a period of two years and has no history of breach. TFC has been licensed, without incident, from 1999 and he managed and controlled TFC at all relevant times. As stated by Santow J, it is necessary to balance the personal hardship of the person against the public interest. There is no evidence Mr Tarrant now understands the problems and will reform. In the Tribunal’s view, the protection of the public and the seriousness of the breaches militate in favour of a lengthy banning order.

388    A banning in the range of 7 to 12 years would be appropriate given the nature of the breaches, Mr Tarrant’s conduct, the significant losses and the potential financial benefits to Mr Tarrant in respect of the breaches. The Tribunal notes that the length of the ban determined by the delegate was at the lower end of this range. ASIC did not press for an increased period of banning and submitted the decision of the delegate should be affirmed. While the Tribunal has found Mr Tarrant’s contraventions were serious and caused loss, the Tribunal has made no findings about dishonesty or fraud beyond those necessarily implicit in our findings relating to certain representations made to his staff and clients referred to above. The Tribunal has concerns Mr Tarrant will not comply with financial services laws in the future but has made no findings about this. When this issue was raised with ASIC at the outset, counsel disavowed that such a case was being advanced. Consequently, Mr Tarrant was not required to respond to this allegation and to make a finding about this in these circumstances would not be procedurally fair. In the absence of submissions to the contrary by ASIC, the Tribunal finds that a banning of seven years is the correct and preferable decision.

47    For these reasons, the AAT affirmed the delegate’s decision.

Conduct of the hearing before the AAT and interlocutory orders

48    The AAT provided a detailed overview at [32]-[108] of its reasons for decision of numerous procedural issues and related difficulties in the conduct of the proceedings. Relevantly, the AAT noted that:

(a)    there was a history of “repeated non-compliance” by Mr Tarrant with the AAT’s orders and directions and he was granted several extensions of time to provide his evidence. Included among the evidence he ultimately filed (much of it late) were two unsigned statements by him dated 22 and 23 October 2012;

(b)    an application by ASIC to dismiss the application under s 42A(5) of the AAT Act was rejected;

(c)    Mr Tarrant was legally represented until 13 May 2013, when his solicitor and counsel ceased to act. At this time, he sought an adjournment for six months. He attached in support of this application a medical certificate which stated that he was unfit for work or court appearances for the period 13-17 May 2013;

(d)    Mr Tarrant sent additional medical reports and letters to the AAT and made two further adjournment requests; and

(e)    all three of Mr Tarrant’s applications for adjournments on medical grounds were rejected by the AAT. The AAT provided oral reasons for those decisions, which were elaborated upon in its reasons for decision. Mr Tarrant’s adjournment application dated 13 May 2013 was refused on the basis that the AAT was not satisfied that there was sufficient evidence that he was unfit to participate in the hearing. Although Mr Tarrant relied on an unsigned report by a psychologist, the AAT noted that he made no arrangements for her to be available for cross-examination. The AAT considered the psychologist’s report and noted that, while the psychologist suggested that Mr Tarrant suffered from severe depression and extremely severe anxiety, she expressed no opinion that Mr Tarrant was unfit to participate in the AAT proceeding. The AAT also observed that Mr Tarrant’s situation was analogous to that in In the matter of Idylic Solutions Pty Ltd – Australian Securities and Investments Commission v Hobbs [2012] NSWSC 731 (Idylic Solutions) in that there was no basis to believe that Mr Tarrant’s condition would be materially different whenever the matter came on for hearing.

49    As to Mr Tarrant’s second adjournment request, which was supported by additional medical reports from the same psychologist, as well as a report by a dermatologist who stated that Mr Tarrant had two basal cell carcinomas which required surgical excision and actinic keratosis which required treatment with a cream, the AAT said that it took these reports into account. His request for an adjournment was rejected, however, on the basis that:

(a)    there was no material before the AAT to find that Mr Tarrant was unable to participate in the proceedings;

(b)    Mr Tarrant was aware that he needed to submit any medical practitioners upon whose opinions he relied to cross-examination, which he failed to do; and

(c)    Mr Tarrant did not make himself available for cross-examination in respect of his financial decision, which he claimed explained why he could no longer afford legal representation.

50    Mr Tarrant failed to appear before the AAT on 14 May 2013, 13 June 2013 and 23 July 2013. When the hearing resumed for the last time on 13-15 August 2013, the AAT noted that it had given Mr Tarrant notice of its decision made on 13 August 2013 rejecting his second adjournment request. He was informed that the AAT hearing would resume on 15 August 2013 and that the proceedings would continue in his absence if he did not attend. The AAT referred to an email that Mr Tarrant sent to the President’s associate which made reference to the AAT’s decision to refuse him an adjournment and to its decision to “continue on without me”. The AAT treated that communication as a further request for an adjournment, which it also refused, giving oral reasons.

51    On 15 August 2013, ASIC applied for an order that certain evidence adduced by Mr Tarrant be excluded (or that the scope of the review be narrowed to exclude the evidence from consideration). This evidence included unsworn statements of Mr Tarrant and an affidavit of Mr Peter Wood (who was not available for cross-examination). The AAT considered ss 25(4A) and 33 of the AAT Act and the common law regarding the impact on the admissibility of evidence of the inability to cross-examine. Ultimately, the AAT ruled that it would not have regard to the unsigned, unsworn statements of Mr Tarrant, but that it would have regard to the affidavit of Mr Wood, subject to submissions on the weight it should be given. The AAT’s reasons for not admitting the unsworn statements may be summarised as follows:

(a)    it was unknown whether Mr Tarrant stood by the unsworn statements as true and correct;

(b)    although he had had many opportunities to adopt these statements, he never did so and the statements remained unsigned, provisional, and subject to possible alteration;

(c)    in these circumstances, the statements should be given no weight, not merely because Mr Tarrant was not available to be cross-examined on them, but also because the AAT should not receive them on a speculative basis as representing Mr Tarrant’s evidence because that speculation could cause “a grave disservice” to Mr Tarrant if in fact he wished to amend them; and

(d)    their exclusion did not absolve ASIC from having to address matters raised in them which ASIC disputed because the central premises of Mr Tarrant’s case were also raised in his s 19 examination which was in evidence and, therefore, needed to be addressed by ASIC.

The appeal

52    The further amended notice of appeal (notice of appeal) filed by Mr Tarrant set out the following purported questions of law and grounds of appeal (errors in original):

Questions of law

1.    Whether as a matter of law the Tribunal made an error of law in applying the wrong test in determining the appropriate penalty?

2.    Whether as a matter of law the Tribunal was required to take into account the Briginshaw standard in findings on material questions of fact adverse to the applicant?

3.    Whether as a matter of law the Tribunal was required to identify the application of the Briginshaw standard in referring to evidence on which the findings on material questions of fact adverse to the applicant are based?

4.    Whether as a matter of law the Tribunal erred in failing to give proper weight to the evidence of a convicted criminal, Mr Shawn Richard, where having done so has affected the parts of the Tribunal decision?

5.    Whether as a matter of law the Tribunal fell into error of law or jurisdictional error by considering questions not open for determination on the evidence namely whether the applicant will not comply with financial services law in the future and whether the applicant had complied with S945A(1)(a), Corporations Act 2001?

6.    Whether as a matter of law the Tribunal erred in making findings of fact about questions not open for determination on the evidence namely whether the applicant will not comply with financial services law in the future and what impact this should have on the length of banning order and whether S945A(1)(a), Corporations Act 2001 had been contravened?

7.    Whether as a matter of law the Tribunal denied the applicant procedural fairness by taking into account when making its decision a factor that the applicant was not given the opportunity to answer. Namely, whether the applicant will not comply with financial services law in the future and whether S945A(1)(a) Corporations Act 2001 had been contravened?

8.    Whether as a matter of law the Tribunal erred in granting leave to ASIC to amend their Statement of Facts and Contentions almost four and a half (4.5) days into a five (5) day appeal hearing?

9.    Whether as a matter of law the Tribunal failed to provide adequate reasons for its decision to refuse the adjournment applications of the applicant?

10.    Whether as a matter of law the Tribunal failed to provide procedural fairness by failing to grant an adjournment requested by the applicant?

11.    Whether as a matter of law the Tribunal failed to take into account and failed to afford proper, genuine and realistic consideration to the following relevant factors it was required to take into account when making its decision. In particular:

a.    Failing to accept the applicant’s unsworn statements as evidence; failing to accept the consistency of the applicant’s evidence even though the applicants unsworn statements were before the Tribunal and consistent with the applicant’s prior evidence given under oath and consistent with evidence from former staff including Gary Costa, Stefanie Seco, Roger Cady, James Brescia; Christian Lotter and Paul Noack;

b.    Failing to accept the evidence of Ms Stefanie Seco, namely because she could not recall the details of conversations she had over approximately four years prior to her cross examination;

c.    Failing to accept or consider evidence of all of the facts and not just a selection of the facts in evidence, pertaining to the clients’ personal circumstances;

d.    Failing to accept or consider evidence of contemporaneous file notes and cashflow calculations in respect to the personal circumstances of clients;

e.    Failing to have regard to ASIC’s conduct throughout the proceedings;

f.    Failing to have regard to the failure within the briefing documents and assumptions given to Mr Alafaci by ASIC for the purposes of obtaining his expert opinion and Mr Alafaci’s misinterpretation of his brief;

g.    Failing to have regard to the lack of a documented reasoning process adopted by Mr Alafaci in his expert’s report;

h.    Failing to have regard to the lack of experience and specialist knowledge of Mr Alafaci in giving an expert’s report;

i.    Failing to have regard to the future impact and consequences of the banning order on the applicant.

12.    Whether as a matter of law the Tribunal took into account the following irrelevant factors it was not required to consider as relevant considerations the Tribunal was required to take into account when making its decision, in particular:

a.    Acceptance of the evidence of Mr Shawn Richard a convicted criminal;

b.    Acceptance of Mr Alafaci’s evidence as an ‘expert’;

c.    Acceptance of Gold Seal report.

13.    Whether as a matter of law the Tribunal erred in unduly intervening in the conduct of the proceedings thereby causing a miscarriage of justice?

14.    Whether as a matter of law the Tribunal’s actions gave an apprehension of bias that failed to afford procedural fairness to the applicant before the Tribunal.

15.    Whether as a matter of law ASIC failed to afford procedural fairness or natural justice to the applicant by failing to act as a model litigant?

16.    Whether as a matter of law ASIC breached its obligations to assist the Tribunal pursuant to s33(1AA) Administrative Appeals Tribunal Act 1975?

17.    Whether as a matter of law ASIC failed to comply with s37 (1)(a) & (1)(b) Administrative Appeals Tribunal Act (1975)?

Grounds relied on

1.    The question of law at (1) arises from the decision made by the Tribunal. The case of ASIC v Adler is referred to at [385] and lists 12 factors from this case which the Tribunal says are relevant to the Tribunal’s consideration of the matter.

The Tribunal has ignored the Applicant’s statement of remorse made in his closing submission.

The Tribunal has not made a finding of dishonesty [387] and has misapplied the factor as to period of disqualification adversely against the Applicant.

2.    The questions of Law at (2) and (3) arises from the decision given the Tribunal’s failure to take into account the Briginshaw standard on the following material findings adverse to the applicant:

a.    The adverse finding that the payments received by the applicant during the period October 2008 – April 2009 were a marketing allowance and were not payments for compensation (reasons for decision at [201]) implies fabrication and dishonesty of the applicant;

b.    The adverse finding that the applicant was reckless or ignorant of his obligations under the Corporations Act 2001 (reasons for decision at [204]) implies negligence of the applicant;

c.    The adverse inference not based on evidence that the applicant was influenced or able to be influenced by the marketing allowance to recommend ASF to clients (reasons for decision at [203]) implies a breach of s947C(2) of the Corporations Act 2001 by the applicant;

d.    The adverse finding that the applicant submitted to the Tribunal an artificial reconstruction of the calculation of compensation payments (reasons for decision at [199]) implies fabrication and deliberate dishonesty of the applicant;

e.    The adverse rejection of Ms Seco’s summary of costs in regards to the calculation of compensation for fixed overheads and running costs (reasons for decision at [198]) implies dishonesty and fabrication of the applicant;

f.    The adverse finding that the investors were unsophisticated and may, therefore, be more likely to be led into error by the representations of the Applicant (reasons for decision at [235]) not supported by the evidence;

g.    The adverse finding that the ASF was a high risk product (reasons for decision at [242]) not supported by the evidence;

h.    The adverse finding that the applicant did not undertake adequate analysis of each of his client’ financial needs and personal circumstances (reasons for decision at [366]) implies negligence of the applicant.

i.    The adverse finding that clients lost their investments in ASF implies that the applicant was responsible for the losses caused by the fraud at ASF (reasons for decision at [363]);

j.    The adverse finding, not based on the evidence, that a very significant number of education presentations were given by TFC staff to clients or potential clients (reasons for decision at [237]) implies a serious breach of s1041E and s 1041H(1) of the Corporations Act 2001;

k.    The adverse finding, based on an incorrect application of S1041E, of the Corporations Act 2001 (reasons for decision at [376]), implies the applicant was guilty of a serious breach and of criminal conduct;

l.    The adverse finding of a number of limitations that should have been apparent to a financial planner based on the PDS (reasons for decision at [359]) implies that the applicant was negligent and/or did not give adequate consideration to the suitability of ASF as an investment.

3.    The questions of law at (5) & (6) arise from the decision given in the determination and consideration of the allegation, not put to the applicant of whether the applicant will not comply with financial services law in the future (reasons for decision at [31,380,388]);

a.    The Applicant was not provided the opportunity to make submissions and was denied procedural fairness in this regard;

b.    The Tribunal took no evidence from either party on the allegation because the allegation was a matter that neither party wish to agitate (reasons for the decision at [69]);

c.    The Applicant had indicated to the Tribunal that should consideration be given to the allegation though not put, the matter before the Tribunal would in effect have to be recommenced from the start as it was not a concern raised with ASIC in the show cause;

d.    The Tribunal had no evidence before it supporting the adverse finding breaching the Briginshaw standard;

e.    The allegation is an adverse assumption made by the Tribunal, which the applicant was not given the opportunity to address;

4.    The question of law at (7) arises from the Tribunal’s decision to grant the respondent a lengthy adjournment to amend and extend its Statement of Facts and Contentions on the fifth day of what was expected to be a five day hearing. The Tribunal failed to consider the prejudice to the applicant of granting an opportunity for amendment and the fact that the Tribunal was a no cost jurisdiction and so the prejudice to the applicant could not be lessened.

5.    The question of law at (8) arises from the Tribunal’s decision in refusing the applicants adjournment applications. The Tribunal failed to provide adequate reasons for the refusal or due weight to the applicant’s medical conditions. The Tribunal further failed to give due weight to the financial prejudice caused, to a large extent, to the applicant by the respondent’s conduct in the proceedings and the Tribunal’s excessive interference in the conduct of the proceedings.

6.    The question of Law at (10) arises from the decision given the failure to take into account and afford proper genuine and realistic consideration to the following relevant factors when making its decision:

a.    Adverse rejection of the applicant’s (Ross Tarrant) evidence that the payment received from ASF was compensation (reasons for decision at paragraph 198).

b.    Adverse rejection of Stefanie Seco’s evidence because she could not recall exact conversations had with the Applicant (reasons for decision at paragraph 195, 198 and 199).

c.    Adverse rejection of evidence from James Brescia, Roger Cady and Gary Costa that was consistent with the applicant’s evidence as to the acceptance of the marketing allowance as compensation.

d.    Adverse effect of falling to accept the evidence of Gary Costa.

e.    Adverse effect of failing to accept all the evidence of Allan Rimell that supported the Applicants case of acceptance of the marketing allowance as compensation.

f.    Adverse acceptance of and failing to have regard to ASICs conduct throughout the proceedings that delayed the proceedings and prejudiced the applicant both financially, emotionally and mentally.

g.    Adverse inference that ASF was a high risk product despite not being supported by evidence (reasons for decision at [242]

7.    The question of Law at (9) arises from the decision given the Tribunal took into account irrelevant factors when making its decision.

a.    Adverse acceptance of the evidence of Shawn Richard that affirmed ASICs allegation that the marketing allowance was not compensation (reasons for decision at [199])

b.    Adverse acceptance of the evidence of Mr Alafaci without having regard to the assumptions put to Mr Alafaci by ASIC and the fact that Mr Alafaci misinterpreted his brief to embark on a fact finding exercise rather than giving a specialised or expert opinion on the questions before him (reasons for decision at [314]).

c.    Adverse acceptance of the evidence of Mr Alafaci without having regard to fact that Mr Alafaci failed to set out his reasoning process in reaching his conclusion and this lead to an inability to test Mr Alafaci’s conclusions. (reasons for decision at [314]).

d.    Adverse acceptance of the evidence of Mr Alafaci without having regard to fact that Mr Alafaci failed as an expert with no specialised experience or knowledge on the questions posed by ASIC in their letter of instruction. (reasons for decision at [314]).

e.    It was unreasonable for the Tribunal to accept the evidence of Mr Alafaci and to make an adverse finding of the entire practice of the applicant based on the limited information and assumption put to Mr Alafaci (reasons for decision at [339, 353]).

8.    The question of law at (12) arises from the Tribunal’s excessive interference in the running of the proceedings including questioning ASIC’s exclusion of potential breaches of the Corporations Law and badgering them to include further and more extensive allegations and the excessive questioning of witnesses adopting the role of counsel rather than independent arbitrator.

9.    The question of law at (13) arises from the Tribunal’s apprehension of bias in not affording procedural fairness and natural justice to the applicant in arriving at its decision:

a.    The Tribunal gave the apprehension of bias in making assumptions and inferences on the evidence against the applicant in the favour of the respondent (ASIC) without providing adequate reasons

b.    The Tribunal gave the apprehension of bias in ignoring ASIC’s conduct throughout the proceedings which failed model litigant rules and the prejudice it caused adversely to the applicant in both financial and emotional terms.

c.    The Tribunal gave the apprehension of bias due of the President’s Labor Party membership and close ties to the then Labor Government who had politicised the ASF fraud to further their political agenda on superannuation during the conduct of the proceedings.

10.    The questions of law at (15), (16) & (17) arise from ASICs conduct throughout the proceedings, including the providing of information (or lack of information) to the Tribunal relevant to the matter for decision and the manner in which ASIC ran its case.

53    Mr Tarrant sought the following orders in his notice of appeal (errors in original):

1.    The matter be determined by the Federal Court and an order be made that the Decision by the Tribunal be overturned.

2.    Costs (in order of actual costs incurred by the Applicant to date) be awarded to the Applicant in accord with its power found at S44 (4), AAT Act.

3.    A further order be made by the Court for damages brought about by ASIC’s factually incorrect press release reported nationally (08/01/2014) for irreversible damages to my professional and personal reputation.

4.    In the alternative that the Federal Court set aside the Decision of the Tribunal.

5.    Further the Federal Court enliven Its power pursuant to S44 (7), AAT Act to make findings of fact rather than remit the matter back to the Tribunal.

6.    Costs (in order of actual costs incurred to date by the Applicant) be awarded to the Applicant in accord with its power found at S44 (4), AAT Act.

7.    In the alternative that the Federal Court set aside the Decision of the Tribunal.

3.    Further that the Federal Court, remit the matter back to the Tribunal, to be differently constituted, and to be fully or partially reheard by the Tribunal, with the hearing of further evidence.

4.    Costs (in order of actual costs incurred to date by the Applicant) be awarded to the Applicant in accord with its power found at S44 (4), AAT Act.

5.    Such other order as the Court deems fit.

Summary of Mr Tarrant’s submissions on the appeal

54    Mr Tarrant filed two outlines of written submissions in support of his appeal. They were dated 14 October 2014 and 24 October 2014 respectively. He also filed written submissions in reply on 10 November 2014. ASIC objected to the 24 October 2014 submissions on the basis that Mr Tarrant did not have leave to file these, but did not press this objection at the hearing. Mr Tarrant, who represented himself during the appeal, also made oral submissions. There was an extensive overlap between many of his submissions, both written and oral.

55    Question of law 1: Mr Tarrant contended that the AAT placed too much emphasis on the ASIC v Adler factor that “longer periods of disqualification are reserved for cases where contraventions have been of a serious nature such as those involving dishonesty”. Mr Tarrant contended that no findings of dishonesty were made, but that the AAT’s decision implied a finding of dishonesty at [387] when it referred to Mr Tarrant’s “wilful breach” of the legislation and concluded that “specific deterrence is therefore a relevant consideration of this case”.

56    Mr Tarrant also submitted that the AAT erred in finding that he did not accept responsibility for his breaches and had not expressed contrition or remorse. He submitted that this finding was not open to the AAT as ASIC did not allege this and he was not provided an opportunity to respond to the issue of whether he had demonstrated remorse. Finally, Mr Tarrant contended that the AAT failed to apply the Briginshaw standard and made a finding that he had made a “wilful breach” which was unsupported by the evidence and indicated bias on the AAT’s part.

57    Questions of law 2 and 3: Mr Tarrant submitted that although the AAT is not bound by the rules of evidence (citing s 33(1)(c) of the AAT Act), this does not exclude the civil standard of proof (Repatriation Commission v Smith (1997) 45 FCR 523 and Morley v Australian Securities and Investments Commission [2010] NSWCA 331; (2010) 247 FLR 140). He submitted that the AAT must proceed on the basis of rationally probative evidence rather than mere suspicion or speculation, citing Minister for Immigration and Ethnic Affairs v Pochi (1980) 44 FLR 41.

58    Mr Tarrant submitted that, although the AAT acknowledged at the hearing that the Briginshaw standard must be applied, it was not in fact applied and “many of the conclusions reached by the AAT are not supported by the weight of evidence before it”.

59    Question of law 4: Mr Tarrant submitted that the AAT erred in placing too much weight on the evidence of one witness, Mr Richard, in circumstances where he was a convicted criminal and his evidence was internally inconsistent and where the AAT’s reliance on it affected its decision. These and other matters are also relied on by Mr Tarrant in support of his contention that there was apprehended bias, which matters included the AAT’s failure “to recognise or address the failings of ASIC during the conduct of the proceedings” while setting out Mr Tarrant’s failings as a litigant.

60    Questions of law 5, 6 and 7: In relation to these questions, Mr Tarrant contended that the AAT made a finding of fact in [388] that was not an issue for determination, i.e. that he would not comply with financial services law in the future. While he acknowledged that the AAT stated that it “took no evidence” relevant to this issue, Mr Tarrant maintained that it was clear from the AAT’s conclusions that it had made such a finding. Further, Mr Tarrant contended that he was denied procedural fairness as he was not afforded an opportunity to address this issue or to provide evidence on it.

61    Question of law 8: Mr Tarrant contended that the AAT erred in allowing ASIC to amend its Statement of Facts and Contentions (SOFAC) four and a half days into what initially was scheduled to be a five day hearing. He submitted that this allowed ASIC to recast its case against him and resulted in the AAT breaching its obligations under s 33(1)(b) of the AAT Act to ensure proceedings are conducted with expedition to ensure proper case management. Mr Tarrant further submitted that he suffered an “irreparable element of unfair prejudice” as a result of the AAT’s decision to grant leave to ASIC, citing AON Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 (AON Risk Services) at [5].

62    Questions of law 9 and 10: Mr Tarrant submitted that the AAT’s denial of his adjournment applications amounted to procedural unfairness and that the AAT failed to provide adequate reasons for its decisions to reject his requests. He submitted that the AAT did not consider ASIC’s conduct of the case in determining not to grant the applications and that, as a result of these decisions, Mr Tarrant became an unrepresented litigant. Mr Tarrant said that he was not aware that the hearing could continue without him and that this should have been considered by the AAT, citing Liu v Australian Securities and Investments Commission [2013] AATA 864; (2013) 62 AAR 273.

63    Question of law 11: Mr Tarrant contended that the AAT erred in not accepting or giving appropriate weight to certain evidence or factors (including ASIC’s conduct of the hearing), which resulted in adverse findings against him.

64    Question of law 12: Mr Tarrant submitted that the AAT erred in considering “irrelevant factors”, namely evidence tendered by ASIC which included Mr Richard’s evidence and the expert reports of Mr Alafaci. In relation to the evidence of Mr Richard, Mr Tarrant cited Liu v Fairfax Media Publications Pty Ltd [2012] NSWSC 900; (2012) 91 ACSR 158 and Liu v Australian Securities and Investments Commission [2014] AATA 817. In relation to the evidence of Mr Alafaci, he cited Whitehouse v Jordan [1981] 1 WLR 246 and HG v The Queen (1999) 197 CLR 414. Mr Tarrant contended that the AAT erred in placing weight on Mr Alafaci’s evidence because his reports were “flawed and unsafe”.

65    Question of law 13: Mr Tarrant submitted that the AAT unduly intervened in the questioning of witnesses (taking over from ASIC’s counsel and limiting his cross-examination of witnesses to 30 minutes per witness), resulting in the appearance of a lack of impartiality and procedural unfairness to him. He submitted that the conduct of the proceedings prejudiced him financially and he was unable to continue to fund legal representation.

66    Question of law 14: Mr Tarrant submitted that the AAT made several interlocutory decisions which favoured ASIC and curtailed his rights (including to cross-examine witnesses). It was submitted that these matters “gave an apprehension of bias that failed to afford procedural fairness to the applicant”. The former political career of the President of the AAT was said to also give rise to apprehended bias. Mr Tarrant also submitted that the AAT did not consider the consequences that the banning order would have on him and that this amounted to a failure to consider all relevant matters.

67    Question of law 15: Mr Tarrant submitted that ASIC failed to afford him procedural fairness by failing to act as a model litigant. In his submissions, he referred to several examples of ASIC’s conduct throughout the hearing which, he contended, resulted in procedural unfairness, unnecessary delay and expense. Mr Tarrant also noted that the AAT did not refer to ASIC’s conduct of the hearing in its reasons for decision and instead focused on his non-compliance throughout the hearing.

68    Question of law 16: It was also submitted by Mr Tarrant that ASIC breached its obligations to assist the AAT pursuant to s 33(1AA) of the AAT Act by failing properly to identify issues, facts and evidence as well as expanding the allegations against him without adequate notice.

69    Question of law 17: Mr Tarrant contended that ASIC failed to comply with ss 37(1)(a) and (1)(b) of the AAT Act by failing to provide the AAT with a completed SOFAC and documentary evidence which was relevant to the hearing.

Summary of ASIC’s submissions on the appeal

70    In its outline of written submissions, ASIC contended that the appeal suffered from two “fundamental misconceptions”. The first misconception related to the function of the AAT. ASIC argued that the AAT did not exercise judicial power and that it is a part of the executive arm of government with an inquisitorial function, citing s 33(1) of the AAT Act. The AAT was bound to determine the proceedings on the material before it and was not limited to the cases advanced by the parties, citing Summers v Repatriation Commission [2012] FCAFC 104. Although the AAT must observe procedural fairness, this did not require it to conduct itself in a manner favourable to an applicant.

71    The second misconception ASIC referred to was the relevance of the “Trio Collapse”. The “Trio Collapse” refers to the collapse of a group of companies affected by the fraud of Mr Richard, including ASF. ASIC contended that the banning order against Mr Tarrant was not made on the basis that he was involved in the management, fraud or collapse of the Trio companies. ASIC submitted that the allegations against Mr Tarrant related solely to his conduct in dealing with his clients.

72    In relation to question of law 1 of the notice of appeal, ASIC submitted that, at [387] of the AAT’s reasons for decision, the AAT expressly did not make a finding of dishonesty, nor did it find that there was a wilful breach. Mr Tarrant was also on notice from at least November 2012 (when ASIC’s amended SOFAC was filed) that ASIC intended to argue that Mr Tarrant lacked remorse and that his lack of insight into his wrongdoing demonstrated a risk of repetition. ASIC noted that the weight to be placed on the ASIC v Adler factors was a matter for the AAT and that the Court’s role in a s 44 AAT Act appeal is not to re-evaluate or confirm the duration of the relevant banning order.

73    In response to questions of law 2, 3, 4, 11 and 12, ASIC submitted that they all amounted to a claim that the AAT preferred or accepted the evidence of ASIC over that of Mr Tarrant, citing Sullivan v Civil Aviation Safety Authority [2014] FCAFC 93; (2014) 64 AAR 120 (Sullivan). ASIC maintained that the AAT’s decision to accept certain of its evidence and not to accept some of the evidence filed by Mr Tarrant (particularly his unsworn statements) was consistent with the AAT’s function of controlling its own processes (citing ss 2A and 33 of the AAT Act). It noted that despite some adverse rulings, Mr Tarrant “was not left without a statement of his case in evidence”. ASIC also submitted that the AAT had accepted some of the evidence which Mr Tarrant complained had been rejected.

74    In relation to questions of law 5, 6 and 7, ASIC contended that the AAT expressly stated at [388] that it did not make any finding regarding Mr Tarrant’s future non-compliance with financial services laws. It also defended those parts of the AAT’s reasons which related to s 945A(1)(a) of the Corporations Act as being relevant to ASIC’s claims that Mr Tarrant contravened s 945A(1)(b) and (c) of that Act.

75    In response to question of law 8, ASIC asserted that it was Mr Tarrant’s counsel who applied for the adjournment on 30 October 2012 and requested that ASIC amend its SOFAC. ASIC also submitted that the AAT suggested that Mr Tarrant, through his counsel at that time, could have objected to ASIC extending its case and that this objection was not taken. It was also argued by ASIC that the AAT confined ASIC to topics already disclosed in its previous SOFAC and that it provided Mr Tarrant with an opportunity to respond.

76    On the AAT’s refusal of the three adjournments, raised by questions of law 9 and 10, ASIC submitted that the AAT had sound bases for refusing the adjournments requested by Mr Tarrant (citing ss 39(1) and 40(1)(b) and (c) of the AAT Act, the AAT’s Adjournment Practice Direction as well as AON Risk Services and Idylic Solutions). ASIC also submitted that Mr Tarrant knew the AAT could continue the hearing without him and that Mr Tarrant had had the opportunity to provide closing submissions in writing, as was indicated in the email dated 15 August 2013 which he sent to the President’s associate.

77    ASIC did not address questions 11 and 12 in its outline of written submissions but contended that they were both incompetent as they did not raise a proper question of law.

78    In response to question of law 13, regarding the AAT’s alleged undue interference in cross-examination, ASIC submitted that the AAT was merely exercising its inquisitorial function in questioning the evidence and material before it. ASIC also submitted that the AAT was entitled to confine the scope of Mr Tarrant’s cross-examination, citing s 33 of the AAT Act and also pointing out that ASIC itself was also subject to similar limits.

79    In relation to question of law 14, ASIC contended that there was no substance in the accusation of apprehended bias based on the former political career of the President of the AAT, citing Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337 (Ebner). ASIC also pointed to several examples of the AAT rejecting applications and arguments made by it during the proceeding which were inconsistent with Mr Tarrant’s claim that ASIC received preferential treatment.

80    Finally, in relation to questions of law 15 to 17, ASIC contended that, as they were framed in terms of ASIC’s conduct, and not that of the AAT, they did not raise questions of law and accordingly did not comply with s 44 of the AAT Act.

Summary of Mr Tarrant’s submissions in reply on the appeal

81    In reply, Mr Tarrant submitted that his notice of appeal did not suffer from fundamental misconceptions and that his understanding of the AAT’s function was consistent with s 33(1) of the AAT Act. He also asserted that the Trio Collapse was relevant, particularly in relation to the AAT’s findings regarding the investments in ASF and its status as a “high risk” investment. Mr Tarrant said that he cannot and should not be held liable for the collapse of Trio.

Submissions on objections to Mr Tarrant’s 10 June 2014 affidavit

82    ASIC objected to an affidavit affirmed by Mr Tarrant on 10 June 2014 (the Affidavit) on the basis of relevance and contravention of the Parliamentary Privileges Act 1987 (Cth) (PP Act). The Affidavit was admitted subject to a ruling under s 136 of the Evidence Act 1995 (Cth) that it only be used in relation to the complaint that ASIC failed to produce all material which was relevant to the AAT’s review (i.e. as evidence of material in ASIC’s possession that it did not produce to the AAT). The Court also granted the parties leave to file submissions in relation to the effect of the PP Act on certain aspects of the Affidavit.

83    In its submissions filed on 2 December 2014, ASIC argued that paragraphs [51]-[54] and annexures MRT16 and MRT17 of the Affidavit should be excluded under s 16 of the PP Act. Section 16 of the PP Act is as follows:

16 Parliamentary privilege in court proceedings

(1)    For the avoidance of doubt, it is hereby declared and enacted that the provisions of article 9 of the Bill of Rights, 1688 apply in relation to the Parliament of the Commonwealth and, as so applying, are to be taken to have, in addition to any other operation, the effect of the subsequent provisions of this section.

(2)    For the purposes of the provisions of article 9 of the Bill of Rights, 1688 as applying in relation to the Parliament, and for the purposes of this section, proceedings in Parliament means all words spoken and acts done in the course of, or for purposes of or incidental to, the transacting of the business of a House or of a committee, and, without limiting the generality of the foregoing, includes:

a)    the giving of evidence before a House or a committee, and evidence so given;

b)    the presentation or submission of a document to a House or a committee;

c)    the preparation of a document for purposes of or incidental to the transacting of any such business; and

d)    the formulation, making or publication of a document, including a report, by or pursuant to an order of a House or a committee and the document so formulated, made or published.

(3)    In proceedings in any court or tribunal, it is not lawful for evidence to be tendered or received, questions asked or statements, submissions or comments made, concerning proceedings in Parliament, by way of, or for the purpose of:

a)    questioning or relying on the truth, motive, intention or good faith of anything forming part of those proceedings in Parliament;

b)    otherwise questioning or establishing the credibility, motive, intention or good faith of any person; or

c)    drawing, or inviting the drawing of, inferences or conclusions wholly or partly from anything forming part of those proceedings in Parliament.     

(4)    A court or tribunal shall not:

a)    require to be produced, or admit into evidence, a document that has been prepared for the purpose of submission, and submitted, to a House or a committee and has been directed by a House or a committee to be treated as evidence taken in camera, or admit evidence relating to such a document; or

b)    admit evidence concerning any oral evidence taken by a House or a committee in camera or require to be produced or admit into evidence a document recording or reporting any such oral evidence;

unless a House or a committee has published, or authorised the publication of, that document or a report of that oral evidence.

84    ASIC also drew attention to article 9 of the Bill of Rights 1688 (UK), which relevantly provides:

That the freedom of speech and debates or proceedings in parliament ought not to be impeached or questioned in any court or place out of the parliament.

85    ASIC cited relevant case law including Amann Aviation Pty Ltd v Commonwealth of Australia (1988) 19 FCR 223. Justice Beaumont observed at 232 that the Court could consider an extract from Hansard, receiving it provisionally for the purpose of a temporary examination to determine whether its receipt into evidence is prohibited by s 16(3) of the PP Act. In the circumstances of that case, Beaumont J found that the relevant Hansard materials were tendered for the purposes of “questioning the motive, intention or good faith of the [minister] and is thus proscribed by s 16(3)(b)” and “inviting… inferences or conclusions from what was said in the Senate and is thus made unlawful by s 16(3)(c)”.

86    In determining whether the paragraphs and exhibits to the Affidavit should be excluded under s 16(3) of the PP Act, ASIC argued that the Court must consider:

(a)    whether the particular documents are covered by s 16(2) of the PP Act and the description “proceedings in parliament”;

(b)    the purpose for which Mr Tarrant sought to rely on the particular documents; and

(c)    whether that purpose falls foul of ss 16(3)(a) to (c) of the PP Act.

87    The two relevant annexures relate to the enquiry by the Parliamentary Joint Committee on Corporations and Financial Services into the collapse of Trio Capital (the PJC). MRT16 is a Hansard extract of the PJC and MRT17 is an extract of ASIC’s submissions to the PJC. ASIC noted in its submissions that Mr Tarrant did not provide the source of the documents, but it acknowledged that they were published on the official website of the Australian Parliament. To the extent that the documents were sourced from this website, ASIC contended that the documents constitute proceedings in the Parliament as they were prepared “in the course of” or “incidental to” the transacting of the business of a committee. ASIC noted that MRT17 was also published on its website and acknowledged that, if Mr Tarrant sourced this exhibit from the ASIC website, it would not constitute “proceedings in parliament”, citing Keane CJ (as his Honour then was), Downes and Besanko JJ in British American Tobacco Australia Ltd v Secretary, Department of Health and Ageing [2011] FCAFC 107; (2011) 195 FCR 123. ASIC said that it was for Mr Tarrant to satisfy the Court that the documents did not infringe s 16 of the PP Act.

88    ASIC added that the purposes for which Mr Tarrant sought to rely on the documents were prohibited by s 16(3) of the PP Act. These purposes, according to ASIC, were:

(a)    there was a deficiency in KPMG’s audit of Trio’s compliance plan and ASIC was aware of the deficiency;

(b)    ASIC did not take any action against KPMG; and

(c)    ASIC’s acceptance of enforceable undertakings was inappropriate.

89    ASIC contended that these purposes are caught by s 16(3) of the PP Act as the Court was being asked to assess the credibility, motive or good faith of ASIC or draw inferences or conclusions on the basis of the documents forming part of the proceedings in the Parliament. Thus MRT16 cannot be admitted and MRT17 can only be admitted if Mr Tarrant demonstrated it was obtained from the ASIC website, in which case MRT17 should be admitted only as evidence of material that ASIC had before it but did not provide to the AAT.

90    In his written submissions dated 8 December 2014 in response to ASIC’s objection, Mr Tarrant contended that both MRT16 and MRT17 should be admitted on the basis that they are relevant to whether ASIC withheld information from the AAT and that they do not offend s 16 of the PP Act. The exhibits were admissible under s 16(4) of the PP Act as they were not made in camera. Mr Tarrant contended that it is irrelevant from where the exhibits were sourced and that they were publicly available as acknowledged by ASIC.

91    In relation to the purpose for which the documents are relied upon, Mr Tarrant contended that he was relying on them only to demonstrate the case put forward on behalf of ASIC to the PJC, not to call into question the findings of the PJC. Mr Tarrant submits that the exhibits demonstrated that ASIC failed in its duties when investigating ASF. He also claimed that ASIC misled the PJC by not revealing the extent of Mr Richard’s fraud or that the funds invested in ASF by Mr Tarrant’s clients were not in fact invested. Mr Tarrant also contended that ASIC withheld certain information from the AAT which led the AAT to find that the financial losses of his clients were a direct result of his advice.

Determination of the admissibility of the Affidavit

92    Mr Tarrant sought to rely on the Affidavit in support of questions of law 15-17 of the notice of appeal, which were added after leave was granted. The Affidavit was admitted on a limited basis of demonstrating the material which ASIC had available to it but did not place before the AAT and subject to the parties having an opportunity to make post-hearing submissions on the relevance, if any, of the PP Act to admissibility.

93    ASIC challenged the competency of each of questions 15-17 on the basis that they were all directed to ASIC’s own conduct in the proceedings and not that of the AAT. That objection should be upheld (for the reasons explained below). Accordingly, it is unnecessary to rule on the admissibility of certain parts of the Affidavit by reference to the PP Act. Nor does the balance of the Affidavit have any relevance given that questions 15-17 are incompetent.

The notice of objection to competency

94    ASIC filed an amended notice of objection to competency on 11 July 2014, which asserted that grounds 1-4, 11-12 and 15-17 in Mr Tarrant’s notice of appeal did not raise any question of law and that, accordingly, the Court did not have jurisdiction to determine these matters. The notice also contended that the Court did not have the power to make orders 2, 3 (first appearing), 4 (second appearing) and 6 sought by Mr Tarrant in his notice of appeal. These orders related to costs and damages.

95    In its outline of written submissions on the objection to competency, ASIC cited several authorities regarding the competency of a s 44 AAT Act appeal and the distinct roles of this Court and the AAT. These authorities included TNT Skypak International (Aust) Pty Ltd v Federal Commissioner of Taxation (1988) 82 ALR 175 (TNT Skypak) at [11]; May v Military Rehabilitation and Compensation Commission [2014] FCA 406 at [5]; Haritos v Commissioner of Taxation [2014] FCA 96; (2014) 62 AAR 467 at [9]; Rana v Military Rehabilitation and Compensation Commission [2011] FCAFC 80; (2011) 55 AAR 300 at [8]; John Holland Group Pty Ltd v Robertson [2010] FCAFC 88; (2010) 185 FCR 566 at [84] and Cyonara Snowfox Pty Ltd v Federal Commission of Taxation [2012] FCAFC 177; (2012) 208 FCR 471 (Cyonara) at [110]-[112].

96    ASIC submitted that although Mr Tarrant described his complaints in the notice of appeal as “questions of law”, this did not mean that they were in fact questions of law, citing Branson and Stone JJ in Birdseye v Australian Securities and Investments Commission [2003] FCAFC 232; (2003) 38 AAR 55 at [15]-[16].

97    ASIC submitted that each of the impugned “questions of law” in the notice of appeal failed to identify a question of law. It also submitted that the majority focused on factual findings made by the AAT, rather than alleged legal errors.

98    On 24 July 2014, Mr Tarrant filed an outline of written submissions in response to ASIC’s objection to competency. Mr Tarrant submitted that his notice of appeal “requests the Court… make a decision in accordance with s 44 of Administrative Appeals Act (AAT Act) and use the Court’s power pursuant to s 44(7) AAT Act to make findings of fact”. The bulk of Mr Tarrant’s submissions did not respond directly to the issue of the competency of his appeal but rather were directed to the substantive merits of his appeal. Mr Tarrant also pointed out (correctly) that questions of law 5-10 and 13-14 were not challenged in ASIC’s notice of objection to competency.

99    In large part, the remainder of Mr Tarrant’s submissions in response to the notice of objection to competency affirmed his earlier submissions made on the appeal, summarised above.

Determination of ASIC’s notice of objection to competency

100    It is desirable to set out some relevant principles applying to the scope of an “appeal” under s 44 of the AAT Act (which, as noted above, arises in the Court’s original, and not its appellate, jurisdiction). The principles are relevant not only to the objection to competency but also to the scope of review in a s 44 appeal in respect of a matter which is properly presented as a question of law. The principles are relatively settled and may be summarised as follows:

(a)    the phrase “on a question of law” is narrower in scope than an appeal which merely “involves” a question of law, with the consequence that where an appeal lays “on a question of law”, the subject matter of the appeal is the properly framed question or questions of law (see Brown v Repatriation Commission (1985) 7 FCR 302 at 304 and Comcare v Etheridge [2006] FCAFC 27; (2006) 149 FCR 522 at [11]-[17] (Etheridge));

(b)    the narrow sense in which an “appeal” lays to the Court from any decision of the AAT on a question of law “is entirely consistent with a statutory intention to limit the Court’s review of factual findings” (see Cyonara at [112]);

(c)    generally speaking, a mixed question of law and fact is not a “question of law” for the purposes of s 44 of the AAT Act (see, for example, Etheridge at [16]; Hussain v Minister for Foreign Affairs [2008] FCAFC 128; (2008) 169 FCR 241 at [32]; Roy Morgan Research Pty Ltd v Commissioner of Taxation [2010] FCAFC 52; (2010) 184 FCR 448 at [26] and [33]; Board of Trustees of the State Public Sector Superannuation Scheme v Edington [2011] FCAFC 8; (2011) 119 ALD 272 at [39]; Cyonara at [112] and Sullivan at [117]), but note also the qualifications which may need to be made to that bald proposition as expressed in Collins v Administrative Appeals Tribunal [2007] FCAFC 111; (2007) 163 FCR 35 (Collins) at [55] per Allsop J (as his Honour then was) with whom Lindgren and Emmett JJ agreed; Federal Commissioner of Taxation v Trail Bros Steel & Plastics Pty Ltd [2010] FCAFC 94; (2010) 186 FCR 410 (Trail Bros) at [12] per Dowsett and Gordon JJ and Comcare v Martinez (No 2) [2013] FCA 439; (2013) 212 FCR 272 (Martinez No 2) at [87] per Robertson J;

(d)    some of the kinds of errors of law which are amenable to review under s 44 of the AAT Act are reflected in the following statements by the Full Court (Black CJ, Drummond and Ryan JJ) in Repatriation Commission v Hill [2002] FCAFC 192; (2002) 69 ALD 581 (Hill) at [59]:

If a tribunal falls into an error of law “which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, to rely on irrelevant material or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion, and the tribunal’s exercise or purported exercise of power is thereby affected, it exceeds its authority or powers”: see Craig v State of South Australia (1995) 184 CLR 163 at 179. An error of law of this kind may support an appeal under s 44 of the AAT Act on a question of law: cf The Hospital Benefit Fund of Western Australia Inc v Minister for Health, Housing and Community Services (1992) 39 FCR 225 at 231-232 per Wilcox, Burchett and French JJ;

(e)    ordinarily there is no error of law simply in making a wrong finding of fact (see Corporation of the City of Enfield v Development Assessment Commission [2000] HCA 5; (2000) 199 CLR 135 at 154 [44] per Gleeson CJ, Gummow, Kirby and Hayne JJ approving Waterford v Commonwealth (1987) 163 CLR 54 at 77 per Brennan J (as his Honour then was). However, a determination of a question of fact by the AAT may give rise to a question of law, including (non-exhaustively) in circumstances where there is a question raised whether the AAT has identified the relevant legal tests to be applied; whether the Tribunal has in fact actually applied the correct test even if its reasons suggest otherwise; whether there is evidence to support a finding of fact, whether facts found fall within a relevant statutory provision and whether the AAT has adopted a manner of decision-making which fails to discharge its obligations according to law (see Trail Bros at [13] and Cyonara at [113]-[115]);

(f)    findings or inferences of fact that are not supported by logical grounds may also give rise to an error of law and be reviewable under s 44 of the AAT Act (see Minister for Immigration and Citizenship v SZMDS [2010] HCA 16; (2010) 240 CLR 611 (SZMDS)) in the context of judicial review for jurisdictional error as opposed to a s 44 AAT Act appeal, however, it is unnecessary to explore this possibility any further here in the context of such an appeal or consider the implications, if any, for such an appeal in light of the High Court’s recent decision in Minister for Immigration and Citizenship v Li [2013] HCA 18; (2013) 249 CLR 332 (Li) on review of a decision for unreasonableness (again for jurisdictional error) because Mr Tarrant does not claim that the AAT’s decision or findings of fact were illogical or unreasonable in a legal sense (as to which, see Sullivan at [119] per Flick and Perry JJ);

(g)    the weighing and evaluation of various pieces of evidence is a matter for the AAT and is generally not susceptible to review in either judicial review proceedings for jurisdictional error (see Abebe v Commonwealth of Australia (1999) 197 CLR 510 at [197] per Gummow and Hayne JJ and Minister for Immigration and Citizenship v SZJSS [2010] HCA 48; (2010) 243 CLR 164 (SZJSS) at [33] per French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ), or in an “appeal” under s 44 of the AAT Act (see Brown v Repatriation Commission [2006] FCA 914 at [7] per Branson J and Fisse v Secretary, Department of the Treasury [2008] FCAFC 188; (2008) 172 FCR 513 at [152] per Flick J). As the Full Court (Fox, Deane and Morling JJ) observed in Collins v Minister for Immigration and Ethnic Affairs (1981) 58 FLR 407 at 410-411 in the context of an appeal under s 44 of the AAT Act and in response to a claim that a Tribunal decision was against the evidence or the weight of the evidence (emphasis added):

A number of authorities was cited by counsel for the appellant in support of the propositions that the making of a decision against the evidence or the weight of the evidence and the making of an unreasonable decision are errors of law. We find it unnecessary to examine these authorities for the reason that, in our opinion, there is no factual basis to found those propositions. We would, however, comment that the concepts of a decision being against the evidence and of being against the weight of the evidence belong to appeals from courts of law and have particular application to jury verdicts. Even in that context, they did not involve questions of law. They certainly have no place when the appeal, or review, is of proceedings of an administrative tribunal which is not bound by the rules of evidence, subject to their obligation to observe the requirements of natural justice, can inform itself as it chooses (see, s 33(1)(c) of the Administrative Appeals Tribunal Act 1975.) An appellant who attacks a conclusion of the Tribunal because of deficiency of proof said to amount to error of law must show, if he is to succeed, that there was no material before the Tribunal upon which the conclusion could properly be based; and

(h)    the Court has acknowledged that, in at least some circumstances, the Court itself might frame questions of law in order to found its jurisdiction under s 44 of the AAT Act. For example, in Rana v Military Rehabilitation and Compensation Commission [2011] FCAFC 80; (2011) 55 AAR 300, the Full Court (Marshall, Tracey and Flick JJ) said at [16] that it was prepared to entertain applications for judicial review notwithstanding the fact that the notice of appeal purportedly made under s 44 of the AAT Act was deficient:

We are prepared to entertain Mr Rana’s applications for judicial review although, for reasons which will shortly appear, we do not consider that any of the grounds raised have any substance. Mr Rana is an unrepresented litigant and, when examined, some, at least, of his claims, had they properly been formulated, could have constituted questions of law for the purposes of s 44 of the AAT Act. In such circumstances, the Court has been prepared to frame appropriate questions and answer them: see, for example, Birdseye at 60-1. In any event, decisions made by the Tribunal are subject to judicial review by this Court, albeit normally not pursuant to the ADJR Act.

101    It is appropriate to now apply these principles to the various questions of law the subject of ASIC’s objection to competency.

102    As to question of law 1, the question presented is whether as a matter of law the Tribunal made an error of law in applying the wrong test in determining the appropriate penalty. ASIC contended that, theoretically, a question about whether the AAT applied the correct test in determining whether to make a banning order and, if so, its length, could amount to a question of law. But it contends that Mr Tarrant’s submissions are directed not to this issue but rather to matters of fact and policy considerations.

103    It is evident from the grounds relied on in respect of question of law 1 that Mr Tarrant’s essential complaint is that the AAT has misapplied the various factors identified in ASIC v Adler by not making a finding of dishonesty and ignoring Mr Tarrant’s statement of remorse in his closing submissions. When question of law 1 is read in conjunction with the grounds relied on, as well as Mr Tarrant’s submissions, we consider that it adequately poses a question of law. Whether or not that question of law has any substance is a separate matter to which we will return.

104    As to questions of law 2 and 3, both relate to the question whether the AAT failed to apply the Briginshaw standard to various adverse findings of fact. In our view, these matters truly raise a question of law. Again, however, there is a separate issue as to whether the Briginshaw standard applied at all to the proceedings (see further below).

105    Question of law 4 poses the question whether the Tribunal erred in the weight it gave to Mr Richard’s evidence. In our view, the question as posed does not raise a question of law. Rather, the question posed is one of fact and the weight given by the AAT to particular evidence, which is beyond the Court’s jurisdiction under s 44. The objection to competency is upheld in relation to this question.

106    Questions of law 11 and 12 may be dealt with together. The former question is expressed in terms of the AAT’s failure to take into account, and give proper, genuine and realistic consideration to, relevant factors. The relevant factors substantially relate to aspects of evidence, such as Mr Tarrant’s unsworn statements, the evidence of Ms Seco, various documents and matters relating to Mr Alafaci’s expert evidence and reports. As is confirmed by the grounds in the notice of appeal relating to question of law 11 (which is erroneously referred to as question of law 7), Mr Tarrant’s complaint essentially relates to the AAT’s preference of some evidence over other evidence. No question of law is properly raised by him in relation to these matters, which are findings of fact or inferences which are the province of the AAT absent a reviewable error, as discussed above, and no such error is raised by Mr Tarrant. Although there is a reference in ground 7(e) (sic) to it being “unreasonable” for the Tribunal to have accepted Mr Alafaci’s evidence, there was nothing in the case as presented by Mr Tarrant to indicate that he was using that term in anything other than its ordinary meaning and not in the particular legal sense referred to in cases such as SZMDS or Li. For completeness, we would add that, in any event, we would not regard the weight given by the AAT to Mr Alafaci’s expert evidence as “unreasonable” in the legal sense of that word, particularly in circumstances where Mr Alafaci was not cross-examined and the AAT never found that ASF was a high-risk investment (see further below). Accordingly, no proper question of law is posed in respect of either of these questions for similar reasons as given above in respect of question of law 4.

107    Particular (i) of question of law 11 is in a different category. It pleads a failure to have regard to the future impact and consequences of the banning order on Mr Tarrant, which is tantamount to claiming that the AAT failed to take into account a relevant matter or material. We consider that this aspect of question of law 11 is properly reviewable in a s 44 appeal.

108    Question of law 12 is expressed in terms of whether the AAT took into account various irrelevant factors. The particulars to this question confirm, however, that Mr Tarrant’s complaints are directed to the AAT’s acceptance of certain evidence, particularly that of Mr Richard and Mr Alafaci, and an audit report by Gold Seal. For similar reasons to those given above in respect of question of law 4, we do not consider that the question posed is a question of law. The objection to competency should be upheld in respect of it.

109    Questions of law 15-17 may be dealt with together. Each focuses not on the conduct of the AAT, but rather, on ASIC’s alleged failure to act as a model litigant, to assist the AAT and to produce documents to the AAT in accordance with relevant provisions of the AAT Act. None of these matters can be described as involving a decision by the AAT on a question of law. We consider that the objection to competency in respect of these questions should be upheld.

110    We have also turned our mind to whether any of the questions which we have found not to involve the question of law could be reformulated so as to give rise to jurisdiction under s 44 of the AAT Act. In our view, they cannot. Insofar as question of law 15 is concerned, which relates to ASIC’s obligations as a model litigant, it is to be noted that the obligations imposed upon Commonwealth agencies by the Legal Services Direction 2005 are not enforceable by a private litigant and can only be raised by or on behalf of the Commonwealth under s 55ZG of the Judiciary Act 1903 (Cth) (see Croker v Commonwealth of Australia [2011] FCAFC 25 at [18] per Siopis, Tracey and Gilmour JJ).

111    The objection to competency should also be upheld in respect of orders 2, 3 (first appearing), 4 (second appearing) and 6 in the notice of appeal. The Court does not have the power to make the orders sought which relate to costs of the AAT proceedings and damages.

Determination of the appeal

112    It is convenient now to determine the questions of law which remain, taking into account the relevant grounds of appeal and Mr Tarrant’s oral and written submissions.

113    Question of law 1: There are several aspects to this matter, none of which discloses any reviewable error on the part of the AAT in our view.

114    As to Mr Tarrant’s complaint that the AAT misapplied the test in ASIC v Adler, we consider that it should be rejected for the following reasons. First, although we consider that appropriate caution needs to be exercised in transposing a list of factors which may be relevant to the imposition of a sanction in one statutory context to another different context, we do not consider that the AAT erred in regarding the 12 relevant factors set out in [385] of its reasons for decision as being potentially relevant to the correct and preferable decision as to the length of any banning order (the factors are set out in [46] above).

115    Secondly, as to Mr Tarrant’s complaint regarding factor (vii), it is true that the AAT made no finding of dishonesty against him. More significantly, however, it is important to note that the AAT saw this particular Adler factor as relating to the seriousness of a contravention and the reference in the Tribunal’s description of factor (vii) to “dishonesty” is given as a non-exhaustive example of such seriousness. There can be no doubt that the AAT concluded that Mr Tarrant’s contraventions were serious for reasons which did not depend on any finding of dishonesty on his part. Those reasons are set out in [388] of its reasons for decision. That paragraph includes an express statement that the Tribunal made no findings about dishonesty or fraud beyond those which were necessarily implicit in the Tribunal’s findings relating to the statements in Representations 3 and 5 that were made to TFC’s staff and clients. That is a reference to the AAT’s finding that Mr Tarrant was aware from October 2008 that Tarrants Finance was receiving a marketing allowance, that he was aware that the statements in Representations 3 and 5 would be passed on to TFC’s clients and that investors would rely on what they were told about TFC not receiving payments or benefits from product providers. In our view, all those findings were open to be made by the AAT, as was its conclusion that the contraventions that it found were serious, not the least because of the pattern of conduct which was involved in many of the contraventions. And in [387], the AAT also expressly stated that there was no evidence of dishonesty. There is no reason to doubt the accuracy of these statements by the AAT.

116    Thirdly, we do not consider that the position is altered by the AAT’s reference, also in [387], that “there is evidence of incompetence and negligent, if not wilful, breach”. The “wilfulness” referred to there related to the AAT’s findings regarding Mr Tarrant’s knowledge and state of mind concerning receipt of the marketing allowance from October 2008 and the statements in Representations 3 and 5 which would be made to TFC’s clients and the reliance they would place on them, as referred to in the immediately preceding paragraph.

117    Fourthly, we do not accept Mr Tarrant’s contention that the AAT erred by taking into account specific deterrence as referred to in factors (vi), (viii) and (xii). The AAT observed in [388] that while it had concerns that Mr Tarrant would not comply with financial services laws in the future, it expressly added that it made no findings about those concerns. Again, there is no reason to doubt the accuracy of that disavowal. The concerns there referred to are presumably those which appear in [387], where reference is made to the absence of any contrition or remorse by Mr Tarrant for the wrongdoing and to the absence of any evidence that Mr Tarrant understood the problems and would reform. In our view, specific deterrence is a relevant factor in determining whether or not to impose a ban and, if so, for how long. The AAT’s stated concerns were relevant to that matter, even if the concerns fell short of a specific finding that Mr Tarrant would not comply with financial services laws in the future.

118    In considering the need for a penalty to reflect specific deterrence, a decision-maker is entitled to have regard, as the AAT did here, to the absence of insight by the person to be punished as to the wrongfulness or error of his or her past conduct in order to deter him or her from engaging in that conduct again, regardless of making any assessment of whether he or she would be able to appreciate, when the penalty is imposed, why the conduct was wrong or erroneous. Specific deterrence can be achieved by imposing a penalty that tells the person how the decision-maker has evaluated the conduct complained of so that the person penalised will understand that a repetition of such conduct will be punished no less severely in the future.

119    Fifthly, we do not consider that the AAT fell into reviewable error in finding that “Mr Tarrant has not expressed any contrition or remorse for the wrongdoing and has sought to blame others for the losses”. In particular, his complaint of procedural unfairness in respect of this matter must be rejected. He was put on clear notice from 16 November 2012 that ASIC was claiming before the AAT that his lack of remorse was relevant to the question of sanction. Paragraph (d) of ASIC’s amended SOFAC said:

The lack of insight and remorse displayed by Mr Tarrant as to the likely effect of and consequences of his conduct whether such conduct was in his capacity as authorised representative or as representative of TFC was a relevant consideration.

120    Mr Tarrant’s related complaint that the AAT erred by not taking into account his statements of remorse in his 600 page closing written submission should also be rejected. It might be noted that only selected extracts from that lengthy submission were adduced in evidence before us. Even if those submissions contained statements of remorse as claimed by Mr Tarrant, it was open to the AAT to give them no weight as they were not evidence and no opportunity was provided to have them tested by cross-examining Mr Tarrant.

121    Questions of law 2 and 3: As noted above, both those questions raise the issue whether the AAT erred by not applying the Briginshaw standard. There are several reasons why these complaints must be rejected. First, there is Full Court authority that there is no general principle of law to the effect that the Briginshaw applies to the AAT (see Sullivan at [98]-[122] per Flick and Perry JJ). Mr Tarrant did not submit that this decision was plainly wrong and we consider it should be followed and applied here.

122    Secondly, and in any event, we consider that the AAT did carefully weigh all the evidence and took into account the seriousness of the claims made against Mr Tarrant, and it was fully aware of the serious implications for him of its adverse findings. In [387] of its reasons for decision, the AAT made express reference to the fact that Mr Tarrant would continue to suffer hardship if a banning order was imposed, in circumstances where he had already served two years of the banning order under review and had no history of breach.

123    Thirdly, and in any event, in our view, all the findings of fact and inferences which are particularised in the grounds of the notice of appeal relating to questions of law 2 and 3 were open to be made by the AAT having regard to all of the evidence before it. It is desirable that we say something more about ground 2(g) in particular, in light of the emphasis placed upon it by Mr Tarrant in his oral submissions. This ground alleges that the Tribunal failed to apply the Briginshaw standard in relation to its alleged “finding” in [242] that ASF was a high risk product. Mr Tarrant asserted that that alleged finding was unsupported by the evidence. Mr Tarrant contended that, in making this alleged finding, the AAT ignored evidence and submissions before it which were to the effect that ASF’s investments involved fixed interest returns and could not therefore be described as “high risk”. As is noted in [243] of the AAT’s reasons for decision, Mr Tarrant contended that ASF was not a high risk product.

124    The fundamental difficulty with this aspect of Mr Tarrant’s appeal is that the AAT made no finding that ASF was in fact a high risk product. The Tribunal’s reference in [242] to ASF being a “high risk product” was not a finding by the AAT to that effect as alleged by Mr Tarrant, but rather was a summary of ASIC’s contention to the AAT on that issue. The AAT’s relevant finding on the issue is to be found in [358] of its reasons for decision, where the Tribunal expressly stated that it “does not expect that ASF would have been identified as a ‘high risk’ investment at the time Mr Tarrant caused ASF to be placed on the TFC approved product list and recommended ASF to TFC clients” (emphasis added). The AAT added that it found “persuasive” Mr Tarrant’s submission that it was unreasonable to make an assessment of ASF with the benefit of hindsight. The AAT then proceeded in [359] to explain why it considered that a prudent advisor should have been aware of ASF’s “limitations” as an investment product, including the risk to capital it presented and why it was unsuitable as a significant investment for the eight particular clients. None of these matters was inconsistent with the AAT’s rejection of ASIC’s submission that ASF was “high risk”. Mr Tarrant’s case in respect of this aspect of his appeal is unsustainable. The same reasoning applies in relation to ground 10(g) of the amended notice of appeal, in which a similar complaint is made.

125    Question of law 4: As noted above, we do not consider that this question truly presents a question of law as it relates to the issue of whether the AAT gave proper weight to Mr Richard’s evidence, which is a question of fact and a matter for the AAT.

126    Questions of law 5, 6 and 7: It is convenient to deal with these matters together. The substance of Mr Tarrant’s complaint is that the AAT considered and made findings in relation to the issue whether he had contravened s 945A(1)(a) of the Corporations Act in circumstances where no allegation was made against him on that matter, so as to give rise to procedural unfairness.

127    We consider that these complaints must also be rejected, for similar reasoning as given above in respect of question of law 1.

128    Questions of law 8, 9 and 10: It is also convenient to deal with these questions together as they all relate to the conduct of the AAT proceedings and their impact upon Mr Tarrant arising from the AAT’s decision to grant leave to ASIC to amend its SOFAC on the fifth day of the appeal hearing and its rejection of Mr Tarrant’s several adjournment applications.

129    As to the first of those matters, it is evident that, although ASIC did not file Mr Alafaci’s expert report until 25 August 2012 (in circumstances where ASIC had requested Mr Alafaci to provide a report as far back at 17 April 2012), there was a further delay until 18 October 2012, when ASIC filed its SOFAC. That was only two days before the hearing was scheduled to commence. It is also clear from that document that ASIC was raising new allegations against Mr Tarrant which had not previously been relied upon by ASIC’s delegate in the primary decision. It is hardly surprising, therefore, that Mr Tarrant’s counsel sought an adjournment because he (Mr Tarrant) was caught by surprise. Equally unsurprisingly because of its own conduct and responsibility for that state of affairs, ASIC consented to an adjournment. The AAT directed ASIC to file and serve an amended SOFAC, any further evidence and expert reports. Although the AAT was understandably critical of ASIC’s conduct, we can discern no reviewable error in its rulings relating to the amendments made by ASIC to its case.

130    As to the AAT’s rejection of Mr Tarrant’s various adjournment applications, at the heart of Mr Tarrant’s complaint is the fact that the AAT did not have before it evidence which he would have wished to tender had his adjournment applications been granted. That contention must fail if the AAT correctly rejected his applications. Mr Tarrant argued that the AAT would have been able to draw inferences from the material provided by him in his unsworn statements, had they remained in evidence.

131    Mr Tarrant continued to receive a transcript of the proceedings before the AAT as it became available while the hearing progressed and he was aware of the fact that the AAT had rejected his unsigned and unsworn statements. That is evident from his email dated 15 August 2013 to the President’s associate. It is also plain from that email that Mr Tarrant was aware that the proceedings could continue in his absence. Notwithstanding that Mr Tarrant was aware of the AAT’s ruling in respect of the inadmissibility of his unsworn statements and the reasons for rejecting them, he chose not to sign the statements or to seek to re-tender them. Instead he chose to rely on his lengthy post-hearing written submissions and extra material which he provided after 15 August 2013.

132    The issue whether or not the AAT erred in refusing to grant an adjournment turns on whether Mr Tarrant can demonstrate that the AAT’s discretion miscarried in law. We acknowledge that there were other courses of action open to the AAT in the circumstances, including that the psychologist and dermatologist could have given evidence and been cross-examined by telephone, which would have avoided the need and expense involved in Mr Tarrant having those professional, and no doubt busy, witnesses travel from Wollongong to Sydney to give evidence at short notice. However, Mr Tarrant made no attempt to suggest to or persuade the AAT that it should adopt this course. Having regard to the reasons given by the AAT, both orally and in its final statement of reasons, for refusing Mr Tarrant’s three requests for an adjournment, we can discern no legal error in the AAT’s decisions such as would amount to procedural unfairness or any other appealable error for the purposes of s 44 of the AAT Act.

133    We do not accept that the Tribunal’s reasons for rejecting the three adjournment requests, as summarised above, were legally inadequate. On the contrary, in our view, those reasons which were delivered both ex tempore and in the AAT’s final reasons for decision, amply explain why the AAT refused the requests in the exercise of its discretion to do so. We are not persuaded that Mr Tarrant has established any appealable error in the AAT’s rulings or related reasons for those discretionary decisions.

134    Questions of law 11 and 12: We have determined that these questions do not properly raise a question of law, except for question of law 11(i) which relates to the claim that the AAT failed to have regard to the future impact on and consequences of the banning order on Mr Tarrant. This contention is unsustainable having regard to the contents of [387] of the AAT’s reasons for decision, which make express reference to the hardship which Mr Tarrant would continue to suffer if a banning order was imposed, in circumstances where he had already been subject to a ban for a period of two years pursuant to the delegate’s decision and he had no prior history of breach. The AAT also noted in that paragraph that TFC had been licensed, without incident, from 1999 and that Mr Tarrant had managed and controlled its affairs at all relevant times. The matter about which Mr Tarrant now complains plainly was taken into account by the AAT.

135    Questions of law 13 and 14: It is convenient to deal with these questions together. Both involve claims of procedural unfairness in the AAT’s conduct of the proceedings.

136    We did not consider that there is substance in Mr Tarrant’s complaint that the AAT unduly interfered in the conduct of the proceedings. The matters of which he complains are properly to be regarded as the AAT appropriately questioning the material and evidence which was placed before it. In our view, it was plainly entitled to do so, particularly having regard to its inquisitorial function.

137    We also consider that the AAT was entitled to ask its own questions of witnesses with a view to seeking to clarify and confirm their evidence. Significantly, the AAT allowed counsel to ask witnesses further questions if they so wished after the AAT’s own questioning of particular witnesses.

138    As to the claims of apprehended bias, we consider that they also should be rejected. The relevant principles in ascertaining whether an apprehension of bias has arisen in a judicial process are set out in Ebner. However, as Gleeson CJ, Gaudron and Gummow JJ explained in Re Refugee Review Tribunal; Ex parte H [2001] HCA 28; (2001) 179 ALR 425 at 426-427 [5], and 434-435 [27]-[29], the principles, when applied outside the judicial system, must take account of the nature of the body or tribunal whose decision is in issue and the different character of the proceedings. Here, however, nothing turns on this difference.

139    The fundamental question is whether a fair-minded and informed lay observer might reasonably apprehend that the AAT might not bring an impartial mind to the resolution of Mr Tarrant’s application for review of ASIC’s decision because of some disqualifying factor. Mr Tarrant alleged that a disqualifying factor here was the President’s association with the Australian Labor Party and his past role as a Minister in an earlier Labor Government. Mr Tarrant also relied on a letter written by Mr Stephen Jones MP, the Federal Member for Throsby, to the Chair of the Senate Economic References Committee which appeared to have been dated shortly prior to publication of the AAT’s reasons for decision in which there was an erroneous reference to the Federal Court having banned Mr Tarrant for seven years. Mr Tarrant appeared to suggest that the press release was evidence of some association between Mr Jones and the President of the AAT. Any such suggestion is entirely without evidence and we reject it.

140    At the time that the letter was dated, Mr Tarrant’s seven year ban imposed by ASIC had been publicly known for about two years and the AAT had reserved its decision on his application for review of that ban. There is no evidence as to how Mr Jones came to refer erroneously to the Federal Court in his letter and there is no reasonable basis on which a fair-minded, informed, lay observer might draw an inference that the President had had some secret communication with Mr Jones or anyone else (see also Eastman v Duggan [2013] ACTSC 111 at [51]-[53] per Rares J).

141    In Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488 at 493 [12]–[13], Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ explained that the test postulated by the law for apprehended bias in the judicial system was what the hypothetical reasonable, or fair-minded, observer of a judge’s conduct might reasonably apprehend. Their Honours explained that that test was objective and founded on the need for public confidence in the judiciary, and was not simply based on the assessment by some judges of the capacity or performance of their colleagues. They said:

At the same time, two things need to be remembered: the observer is taken to be reasonable; and the person being observed is “a professional judge whose training, tradition and oath of affirmation require [the judge] to discard the irrelevant, the immaterial and the prejudicial” [Vakauta v Kelly (1988) 13 NSWLR 502 at 527, per McHugh JA, adopted in Vakauta v Kelly (1989) 167 CLR 568 at 584-585, per Toohey J].

142    Their Honours said that the hypothetical observer is not assumed to have detailed knowledge of the law or the character or ability of the particular judge. The reasonableness of any suggested apprehension of bias must be considered in the context of ordinary judicial practice.

143    Underlying the importance of the appearance of the independence and impartiality of the judiciary is the fundamental notion that our society expects judges and the work they do in their official capacities to be the product of fair, impartial decision-making according to law. The principle that a judge who is actually, or apparently, biased should not decide a matter is one of the fundamental principles of natural justice or procedural fairness.

144    Here, in our opinion, a fair-minded lay observer, acting reasonably with knowledge that the President was a professional judge (s 7(1) of the AAT Act prohibits the appointment of any person as the President of the AAT unless he or she is a Judge of the Federal Court) with the characteristics that we have identified in [141] above, could not form the view that he had had some secret, or any, communication with Mr Jones or anyone else as to the length, if any, of a banning order on which the AAT had reserved its decision or on anything concerned with that reserved decision. Such an observer would have rejected, as being speculative and baseless, any apprehension of the kind for which Mr Tarrant argued, that the President might be biased solely on the basis of Mr Jones’ letter’s erroneous reference to the Federal Court.

145    In our view, these matters fall well short of meeting the requisite test which is to be viewed through the eyes of the hypothetical bystander. If the position had been different, the Court may have had to grapple with the difficult question of the application of the doctrine of apprehended bias to a multi-member decision-maker (as to which see, for example, the different views expressed on that matter in McGovern v Ku-ring-gai Council [2008] NSWCA 209; (2008) 72 NSWLR 504).

146    Nor do we consider that there is any substance in Mr Tarrant’s claim that the AAT gave preferential treatment to ASIC which gave rise to apprehended bias. As ASIC pointed out, the AAT rejected various applications, evidence and arguments advanced by ASIC, including:

(a)    ASIC’s application that the substantive application for review of the delegate’s decision be dismissed pursuant to s 42A(5) of the AAT Act;

(b)    ASIC’s application to limit the scope of the review pursuant to s 25(4A) of the AAT Act;

(c)    ASIC’s application to have Mr Woods’ affidavit excluded;

(d)    the AAT placed no weight on the evidence of Mr Brown, who was called by ASIC;

(e)    the AAT did not accept ASIC’s case, relying in part on Mr Richard’s evidence, as to the time at which the marketing allowance was agreed; and

(f)    the AAT was not satisfied that Representations 1, 2 and 4 advanced by ASIC were misleading or deceptive.

147    It is evident that the AAT ruled in Mr Tarrant’s favour on certain matters and in favour of ASIC on other matters. In our view, the relevant question, viewed through the eyes of the fair-minded lay observer, acting reasonably, is not how many of the AAT’s rulings or comments were critical of Mr Tarrant as compared with the number of those which were adverse to ASIC. Rather, the relevant question is whether the fair-minded lay observer, acting reasonably, might possibly apprehend that the AAT might not have brought an impartial mind to the making of the decision on its review because it had not adequately explained its particular rulings and findings which impacted upon either or both Mr Tarrant and ASIC. In our view, there is no basis in the AAT’s reasons for its decision on which the fair-minded lay observer, acting reasonably, could possibly have formed such an apprehension: cf SZJSS at 178 [41]-[44]. We reject Mr Tarrant’s submission that ASIC received preferential treatment which was indicative of apprehended bias.

Conclusion

148    The appeal should be dismissed. ASIC’s objection to competency should be upheld in respect of questions of law 4, 11 (apart from particular (i)), 12 and 15-17 and in respect of orders 2, 3 (first appearing), 4 (second appearing) and 6 of the orders sought in the notice of appeal. We were not informed of any reason why costs should not follow the event in the ordinary course. Orders will be made accordingly.

Associate:

Dated:    6 February 2015