FEDERAL COURT OF AUSTRALIA

ADMINISTRATIVE LAW – appeal from AAT – denial of natural justice – refusal to adjourn where unrepresented litigant was too ill to attend – reliance on matters the litigant had no opportunity to address – dismissal of substantial application without affording the applicant an opportunity to be heard – significance of a representation and assurance by a solicitor for the other side not being adhered to – discretion under s 1292 of the Corporations Law.

Administrative Appeals Tribunal Act 1975, s 42A

Corporations Law, ss 1288, 1292

R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13 referred to

Commonwealth of Australia v Human Rights and Equal Opportunity Commission (1998) 152 ALR 182 referred to

Taylor v Taylor (1979) 143 CLR 1 applied

Re Anasis; Ex parte Total Australia Ltd (1985) 11 FCR 127 applied

Re Baker; Ex parte Baker v Pioneer Industries Pty Ltd (unreported, Kiefel J, 11 August 1995) applied

Re Faour; Ex parte NEC Home Electronics Australia Pty Ltd (unreported, Beaumont J, 2 April 1996) applied

Guse v Comcare (1997) 25 AAR 477, affirmed on appeal, Guse v Comcare (1998) 47 ALD 495 referred to

Roach v B & W Steel Pty Ltd (1991) 23 NSWLR 110

MICHAEL VINCENT BOURKE v COMPANIES AUDITORS AND LIQUIDATORS DISCIPLINARY BOARD

NG 388 of 1997

Burchett J

Sydney

26 June 1998

on appeal from the administrative appeals tribunal

THE COURT ORDERS THAT:

1.         The appeal be allowed;

2.         The decision of the Administrative Appeals Tribunal be set aside;

3.         The matter be remitted to the Tribunal, differently constituted, to be dealt with according to law;

4.         The second respondent pay the costs of the applicant.

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

on appeal from the administrative appeals tribunal

REASONS FOR JUDGMENT

On 24 June 1998, I allowed, with costs against the second respondent, this appeal on a point of law from the Administrative Appeals Tribunal, setting aside the decision of the Tribunal, which had dismissed the applicant’s proceeding in his absence, and remitting the matter to the Tribunal, differently constituted, to be dealt with according to law.  I reserved my reasons, which I now deliver.

The applicant’s registration as a liquidator had been cancelled under s 1292(2)(a)(i) of the Corporations Law on the ground that he had contravened the requirement to submit triennial statements imposed by s 1288 of the Law.  Section 1292 confers on the first respondent, the Companies Auditors and Liquidators Disciplinary Board established by s 202 of the Australian Securities Commission Act 1989 and referred to in s 9 (the definition of “Board”) of the Law, a discretion, in such a case, to “cancel, or suspend for a specified period, the registration of [a registered liquidator] as a liquidator”.  Mr Bourke’s application for review by the Administrative Appeals Tribunal, assuming the original contravention was accepted, required the Tribunal to exercise the discretion whether to cancel or suspend for a specified period.

At some stage, Mr Bourke was made bankrupt.  Plainly, this event did not annul his obligation to comply with s 1288, but, equally plainly, it raised questions for consideration in the exercise of the discretion as to the appropriate consequence to be visited upon failure to comply.  Whether or not the applicant, had he been given the opportunity to advance an argument on his own behalf, would have relied on the implications of his bankruptcy, the Tribunal was aware of it, as well as of contentions which suggested a medical issue and a question of the late submission of “the outstanding returns in question”.  Certainly, the applicant, who was not legally represented at directions hearings in the Tribunal, as he was not before me, failed to provide more than a few lines in sketchy statement of the grounds of his application.  But this is far from uncommon in the case of unrepresented litigants, and cannot rationally be regarded as in itself demonstrating a lack of bona fides.

No application was made under s 42A(5) of the Administrative Appeals Tribunal Act 1975 that the application should be dismissed summarily without the Tribunal proceeding to review the decision that was its subject:  cf Guse v Comcare (1997) 25 AAR 477, affirmed on appeal, Guse v Comcare (1998) 47 ALD 495.  Instead, the matter was treated as ready for hearing, and a hearing date was fixed.  This might be thought entirely appropriate, considering the relatively straightforward discretionary issues involved, and the difficulty of obtaining detailed compliance with formal requirements by an unrepresented litigant resident at Maitland.  After all, it is a function of the Tribunal to determine administrative disputes on the merits, a function that was unlikely to be assisted in the circumstances by a zealous adherence to formality. 

On the morning of the hearing date, 14 April 1997, a Monday, the applicant telephoned the associate to the Deputy President who was to hear the matter.  There is some controversy between them as to precisely what he said, but there is no dispute that he commenced by telling her:

“I am due to attend a hearing before Deputy President McMahon at 10.00 today, however I have a problem.  I have had a gastric and bilious attack and I am not able to travel as I am running to the toilet constantly.”

Mr Bourke says he raised the question whether he could have a hearing by telephone, but Ms Taverner, the associate, says as to this:

“I do not recall whether he requested that the matter proceed by way of telephone.  It is my practice to record such requests in a file note.  So far as I am aware no file note was made recording a request for a telephone hearing.”

Of course, a practice followed in the normal arrangement of telephone hearings might not have been followed if the gravamen of Mr Bourke’s call was regarded at the time, as it might well have been, as a request not to proceed with the particular hearing that had already been fixed for that day.  Since Ms Taverner was not prepared to deny Mr Bourke’s allegation, on which he was not cross-examined, and having regard to the probabilities, including those suggested by a later telephone conversation to which I shall now refer, I accept that Mr Bourke did suggest the matter could be dealt with by telephone. 

At any rate, there is little dispute about the second call which Mr Bourke says he made that morning.  He says that he called a Mr David Ross of the Australian Securities Commission at about ten minutes past nine, telling him of his gastric and bilious attack.  Mr Ross responded:

“That’s no good, well I don’t suppose you will be there today.”

Mr Bourke answered:

“I have spoken to Ms Julieanne Taverner, associate to Deputy [President] McMahon and requested a ’phone link-up to the hearing so I can participate [and] she said [that] in my condition the matter would have to proceed at a later date.”

To this Mr Ross replied:

“We won’t be actively contesting any application.”

Mr Ross, who is a solicitor, has sworn an affidavit in which he says of this account that it “does not entirely accord with my recollection.”  He goes on:

“I do recall that the Applicant stated that he had advised Ms Tavener [sic] of his condition but at no time in the course of the conversation did the Applicant tell me that Ms Taverner had told him that the matter would not proceed on that day.  I do recall that I was aware that the Applicant was calling from Maitland and for this reason, apart from his claim of ill-health, would not physically be able [to] attend the hearing at 10AM that day in Sydney, some 200 kilometres from his current location.  I did not give any undertaking not to contest any Application.”

There are two comments to be made about this affidavit.  In the first place, Mr Ross does not deny, in dealing with a quite short alleged conversation, which he says “does not entirely accord with my recollection” but which he certainly does not repudiate in substance, that Mr Bourke did refer to a request for a telephone link-up to the hearing so that he could participate.  I accept that Mr Bourke did so.  The matters denied are that Mr Bourke said Ms Taverner had told him the matter would not proceed on that day and that he had himself said “we won’t be actively contesting any application”.  The second comment relates to the last matter.  Mr Ross goes on in his affidavit to say:

“I do recall that I said ‘I will be attending at the Tribunal and I will advise Mr McMahon of this telephone call.  I will not actively pursue the strike out of your Application.  I will advise you later of the result’.”

The difference, in this respect, between what Mr Bourke recalls Mr Ross as having said and what Mr Ross recalls is rather minuscule, and, to the extent that it matters, probably represents a simple failure of precision in communication.

I should note that the respective versions were maintained at the hearing before me by Mr Bourke, on the one hand, and by the Australian Securities Commission on the other.  Entirely appropriately, the first respondent, the Companies Auditors and Liquidators Disciplinary Board, filed a submitting appearance.  See R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13 at 17 (arguendo), 35-36; and see Commonwealth of Australia v Human Rights and Equal Opportunity Commission (1998) 152 ALR 182 at 195-196, 206-207.

When the matter came before the Tribunal that morning, at just after 10a.m., the Deputy President did not ask Mr Ross, who appeared for the Australian Securities Commission, to indicate his client’s position in view of Mr Bourke’s non-appearance.  The transcript records that, immediately upon Mr Ross announcing his appearance, the Deputy President said:

“My associate received a telephone call this morning from Mr Bourke.  He said that he had a gastric attack and that he would be unable to attend today.  In view of the history of this matter, and in view of his non-appearance before the Board, he [here the tape apparently became indistinct] to comply with any directions that have been given by this Tribunal and his failure to attend on a number of other occasions, I do not propose to accept his excuse in the absence of any corroborating medical evidence.  No such corroborating evidence was offered, so I propose to proceed in his absence.”

If, as the solicitor now appearing for the Commission suggested, and as I think likely, a more complete transcript would have shown that the Tribunal asserted Mr Bourke had failed “to comply with any directions that have been given by this Tribunal”, he was in error.  Whether or not the compliance was satisfactory to the Deputy President, Mr Bourke had lodged a statement of facts and contentions, which he had been directed to do, although that statement was extremely brief.  A statement of the evidence of witnesses would only have been required if he had intended to call witnesses.  His compliance with the requirements had apparently been accepted as sufficient to enable the matter to be listed for hearing.  But a much more significant point which emerges from the transcript is that Mr Ross did not immediately inform the Tribunal, either that Mr Bourke had telephoned him and been given the assurance, which he now says he gave, that he would “advise Mr McMahon of this telephone call” and would “not actively pursue the strike out of [the] application”, or that the applicant had requested a telephone link-up to the hearing so that he could participate.  Properly advising the Deputy President of the telephone call would, of course, have involved advising him that the question of hearing the applicant by telephone had been raised.  It was not until after the Tribunal’s decision had been made that Mr Ross told the Deputy President he had spoken to Mr Bourke “and had a conversation of similar vein of course to your associate”.  According to the transcript, which is again marred by an indistinct tape, Mr Ross did not even then say anything about either of the matters upon which he had given Mr Bourke his assurance.  But he did tell the Deputy President that he had said to Mr Bourke something which is both contrary to Mr Bourke’s affidavit and not to be found in his own - that he had said he “would be relying on the decision of the AAT with regard [to] this particular issue of his non-attendance”.  Thus he acted, though doubtless unintentionally, “contrary to [his] representation”, so as to vitiate the order made in his client’s favour:  Roach v B & W Steel Pty Ltd (1991) 23 NSWLR 110 at 113.  It is very important that what counsel or solicitors represent to the other side, especially to an unrepresented litigant, should be scrupulously adhered to, and the principle laid down by the Court of Appeal should be in no way weakened.

Having stated the circumstances, it is convenient that I should set out in full the Tribunal’s decision, which is brief:

“Well, in this matter the law is quite clear.  There is an obligation on registered liquidators to file prescribed statements every three years.  The material in the T documents before the respondent board indicates that none of these returns has been lodged since the inception of the proceedings in this Tribunal, nothing of any kind resembling the prescribed returns has been filed, no information has been given, no evidentiary material has been provided for the Tribunal, notwithstanding directions to that effect.  I am satisfied that the consequences of failing to file the triennial statement which resulted in the cancellation of the liquidator’s registration by the Board should be affirmed.

There is provision in Section 1292 to treat failure to file prescribed returns, not only by cancellation but also by suspension for a specified period, there is no material before me and apparently there was none before the Board, which indicates that [sic] in any way  a reason for the difficulty, except that the applicant was bankrupt, which of course, is not an acceptable reason.  There certainly has not been placed before this Tribunal or the Board any material indicating that the preferable decision should be to suspend for a specified period rather than to cancel registration.  In the absence of that material, it seems to me that cancellation is the only option - was the only option available to the Board and is the only option available to this Tribunal.  Accordingly, I will affirm the decision [under] review.”

In my opinion, this decision was fatally flawed.  Whether or not the associate had been told, Mr Bourke had made the solicitor for the opposing party aware of his proposal to proceed by telephone, and he had been assured, as I have pointed out, both that “the strike out” of his application would not be actively pursued and that the solicitor would “advise Mr McMahon of this telephone call”, the most important part of which, relevantly, was the assurance that the striking out of the application would not be sought.   The conversation, in its context, as recounted by Mr Ross himself, could only have meant that the applicant’s claim of incapacitating illness was not disputed.  Mr Ross did not ask for the sending of a medical certificate by facsimile, or for the name and telephone number of a doctor with whom the matter could be checked.  Had Mr Bourke’s bona fides been challenged, the course could have been taken by Mr Ross of making an application under s 42A for the dismissal of the matter on the ground that the applicant had not proceeded with it and had not complied with a direction fixing the date for hearing, and that issue could have been determined after a sufficient delay to ensure the availability of medical evidence and that Mr Bourke could have attended, so that he could be heard, had he chosen to do so. 

The fact is Mr Ross had accepted the reality of Mr Bourke’s illness, and there was no evidence that it was not real.  Nevertheless, the Tribunal, without hearing about the conversation with Mr Ross in which there was no suggestion that medical evidence would be required, or even inviting a submission from Mr Ross, refused to adjourn because no corroboration was offered in the call to the Deputy President’s associate (but a telephone hearing was suggested, when the question of corroboration could have been raised), and proceeded to deal with the substance of the application in the applicant’s absence.  That was not a course which was legally open.  It denied the applicant the opportunity to argue his case, either on the substantial issue, or for an adjournment.  The adjournment, at least, could have been argued by telephone, as the applicant had suggested (though the Deputy President was not told this by Mr Ross).  The right to be heard is so fundamental in our law that even an unwitting denial of it, much more a denial made inevitable by the breach of an assurance given by the solicitor for the other side, may ground the setting aside of a decision as conflicting with the requirements of natural justice:  Taylor v Taylor (1979) 143 CLR 1; Re Anasis; Ex parte Total Australia Ltd (1985) 11 FCR 127 at 133; Re Baker; Ex parte Baker v Pioneer Industries Pty Ltd (unreported, Kiefel J, 11 August 1995); Re Faour; Ex parte NEC Home Electronics Australia Pty Ltd (unreported, Beaumont J, 2 April 1996).

Although the Deputy President dealt with the matter on the merits, he also gave weight to what he perceived as past failures to comply with directions, which in his view provided a reason for denying any adjournment and dealing with the matter at once “in the absence of any corroborating medical evidence”.  To the extent that this approach purported to exercise powers contained in s 42A, it involved a further denial of natural justice, since the applicant had never been called upon to answer any charge of that kind.  To the extent that it relied on the absence of corroborating medical evidence, it was, as I have pointed out, inconsistent with the applicant’s telephone conversation with Mr Ross.  Medical corroboration was never sought, and the applicant was effectively denied the opportunity to procure its immediate transmission by facsimile to the Tribunal.

Finally, the reasons of the Tribunal accept the applicant’s bankruptcy, but dismiss it from consideration as a justification of the contravention of s 1288.  The Tribunal, doubtless because it had denied itself the opportunity of hearing a full argument, overlooked the significance of the bankruptcy, not for the operation of s 1288, but for the exercise of its discretion under s 1292.  So disruptive a factor affecting the applicant’s life and business as his bankruptcy must have been relevant to that discretion, and should have been considered.

For all these reasons, I made at the hearing the orders earlier stated.

Associate:

Dated:    26 June 1998