FEDERAL COURT OF AUSTRALIA

Good to Go Loans Pty Ltd v Australian Securities and Investments Commission [2015] FCA 1350

THE COURT ORDERS THAT:

1.    Pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) and r 26.01 of the Federal Court Rules 2011 (Cth), the proceeding be dismissed.

2.    Unless a party notifies in writing the Court by 4:00 pm on 3 December 2015, indicating opposition to this order as to costs, the Applicant pay the Respondent’s costs of and incidental to the proceeding to be taxed in default of agreement.

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

REASONS FOR JUDGMENT

The Application

1    The Court has before it an interlocutory application brought by the respondent (ASIC) for summary dismissal of the proceeding commenced by the applicant (Good to Go). Good to Go operates a credit business which includes the business of small amount lending.

2    The proceeding was commenced by originating application supported by a statement of claim. In the originating application, Good to Go seeks four declarations pertaining to the correct construction of various provisions of the National Consumer Credit Protection Act 2009 (Cth) (the Act) and the powers that may be exercised by ASIC under the Act.

3    By its interlocutory application, ASIC seeks summary dismissal of the proceeding pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) or r 26.01 of the Federal Court Rules 2011 (Cth). In brief summary, ASIC contends that the declarations sought by Good to Go do not give rise to a justiciable controversy because the questions raised are abstract or hypothetical or may never arise. The interlocutory application is supported by two affidavits of Ms Melanie Spong of ASIC, which annex relevant documents and correspondence. No affidavit material was filed by Good to Go; instead it referred to and relied on many of the exhibits to Ms Spong’s affidavits.

4    For the reasons that follow, ASIC’s contention should be accepted with respect to all four declarations sought by Good to Go in the originating application. That being the entirety of the relief claimed, and it not being suggested that the form of relief could be reformulated to overcome the points raised by ASIC, it follows that the proceeding should be dismissed.

Legislative and regulatory provisions

5    In order to provide context for the facts referred to below and in order to understand some of the parties’ contentions, it is necessary to set out some legislative and regulatory provisions.

6    Section 37 of the Act deals with the circumstances in which a licence may be granted. Section 37(1) provides in part that ASIC must grant a person (other than an authorised deposit-taking institution) a licence if (among other things):

(b)    ASIC has no reason to believe that the person is likely to contravene the obligations that will apply under section 47 if the licence is granted; and

(c)    ASIC has no reason to believe that the person is not a fit and proper person to engage in credit activities …

7    Further, section 37(2) provides that for the purposes of paragraph (1)(b) and (c), ASIC must (subject to an exception which is not presently relevant) have regard to (among other things):

(h)    if the person is not a single natural person, whether ASIC has reason to believe that any of the following persons is not a fit and proper person to engage in credit activities:

(i)    if the person is a body corporate – each director, secretary or senior manager of the body corporate who would perform duties in relation to the credit activities to be authorised by the licence;

…

(i)    any other matter ASIC considers relevant …

8    Section 45 of the Act empowers ASIC to impose, vary or revoke conditions on licences. Subsections (1) and (2) of s 45 provide:

(1)    ASIC may, at any time:

(a)    impose conditions, or additional conditions, on a licence; and

(b)    vary or revoke conditions imposed on a licence.

(2)    ASIC may do so:

(a)    on its own initiative; or

(b)    if the licensee lodges an application with ASIC for the imposition, variation or revocation …

9    Section 47 of the Act sets out general conduct obligations of licensees. Section 47(1) provides that a licensee must (among other things):

(c)    comply with the conditions on the licence; and

(d)    comply with the credit legislation; and

(e)    take reasonable steps to ensure that its representatives comply with the credit legislation; and

(f)    maintain the competence to engage in the credit activities authorised by the licence; and

(g)    ensure that its representatives are adequately trained, and are competent, to engage in the credit activities authorised by the licence; and

…

(k)    have adequate arrangements and systems to ensure compliance with its obligations under this section, and a written plan that documents those arrangements and systems …

10    Section 55 of the Act deals with suspension and cancellation of licences. Under this section, ASIC may suspend or cancel a licensee’s licence if (among other things) the licensee has contravened an obligation under s 47, or if ASIC has reason to believe that the licensee is likely to contravene an obligation under that section, or if ASIC has reason to believe that the licensee is not a fit and proper person to engage in credit activities. Section 55(4) provides that ASIC may only suspend or cancel a licensee’s licence under the section after giving the licensee an opportunity to appear, or to be represented, at a hearing before ASIC that takes place in private, and to make submissions to ASIC on the matter.

11    Section 327 of the Act provides for merits review by the Administrative Appeals Tribunal of decisions made by ASIC under the Act, with certain exceptions.

12    In order to give context for the correspondence referred to below, as well as the declarations which Good to Go claims in its originating application, it is necessary to refer to two Regulatory Guides published by ASIC. The Regulatory Guides, among other things, provide general guidance on how ASIC will exercise specific powers under the legislation. The relevant Regulatory Guides are:

    Regulatory Guide 204: Applying for and varying a credit licence; and

    Regulatory Guide 206: Credit licensing − Competence and training.

13    The Regulatory Guides use the expression ‘responsible manager’ which does not appear in the Act. The concept is introduced in paragraph RG 204.16 in the first Regulatory Guide. That paragraph deals with questions which an applicant for a licence may be asked and states in part:

You will be asked questions to confirm that you will comply with the obligations that you will have under the National Credit Act if the credit licence is granted.

You will be asked to identify each of the people who are involved in the management of your credit business. In the online application, these people are called your ‘fit and proper people’.

You will be asked to indicate which of these people you rely on to demonstrate that you are competent to engage in credit activities. These people are called your ‘responsible managers’.

14    The expression ‘responsible manager’ is referred to again at paragraphs RG 204.220 to RG 204.223 which provide as follows:

RG204.220    You must identify at least one person as a responsible manager. We will assess the knowledge and skills of your responsible managers to determine whether you are competent to engage in the credit activities for which you have applied.

Note: For further information on the role of responsible managers and how we will assess your organisational competence by looking at the knowledge and skills of your responsible managers, see RG 206.

Key person licence condition

RG 204.221    If we consider that you are heavily dependent on the expertise of a small number of people to be competent to engage in credit activities, we are likely to include a condition on your credit licence (if it is granted) that specifies that these people are ‘key people’ to your business.

RG 204.222    If we put this condition on your credit licence, you will have to:

(a)    notify us if any of your key people leave, or are about to leave, your business; and

(b)    nominate another suitably qualified person to take over from them.

RG 204.223    You cannot change your key people unless you have varied your credit licence. For more information on applying to vary your credit licence, see Section H.

15    In Regulatory Guide 206, paragraph 206.33 states under the heading “Responsible managers”:

RG 206.33    To assess your organisational competence, we look at the qualifications and experience of the people in your business who are required to meet the ‘fit and proper’ test, or a subset of them. These are your ‘responsible managers’ and you will be asked to identify them in your licence application. We look at their qualifications and experience because they are the people who will be responsible for the quality of the credit activities your business provides.

16    Further, paragraph RG 206.42 states:

RG 206.42    If we think your organisational competence is heavily dependent on one or two responsible managers, we may impose a ‘key person licence condition’ on your credit licence. The key person licence condition would name the responsible managers you are depending on and, if these people change, you would have to identify other responsible managers to replace them and demonstrate that you continue to have the organisational competence to provide your credit activities.

17    As appears from the passages set out above, the expression ‘responsible manager’ refers to a person against whom ASIC will assess whether the applicant for a licence, or a current licensee, meets certain obligations or requirements under the Act, referred to as “organisational competence” requirements.

Factual overview

18    Good to Go holds, and has at all relevant times held, an Australian credit licence under the Act.

19    Good to Go’s licence includes a condition headed “Key Person Requirements” which nominates a key person and requires Good to Go to do certain things in the event that the nominated person ceases to be an officer of Good to Go. The condition reads:

If any of the following people cease to be officers of the licensee or to perform duties on behalf of the licensee with respect to its credit business:

(a)    KATHRYN GAY CRAWFORD;

the licensee must, within five business days after that event:

(b)    notify ASIC in writing that the person ceased to be an officer of the licensee or to perform duties on behalf of the licensee with respect to its credit business, and the date on which this occurred; and

(c)    lodge with ASIC an application for variation of this condition that includes the following:

(i)    the name and address of each person that the licensee proposes to rely on as a replacement key person;

(ii)    the date on which that person commenced, or will commence, duties on behalf of the licensee with respect to its credit business; and

(iii)    the educational qualifications and experience of that person; or

(iv)    if the licensee is not proposing to rely on any replacement key person, a detailed description of how the licensee will continue to comply with the Act and the conditions of the licence.

20    I note that the condition set out above, rather confusingly, has the word “and” at the end of paragraph (c)(ii) and the word “or” at the end of paragraph (c)(iii). Counsel for ASIC submitted that paragraph (c) provides two alternative courses of action – either taking the steps outlined in sub-paragraphs (i), (ii) and (iii), on the one hand, or taking the step outlined in sub-paragraph (iv), on the other. It would appear from the phrasing of paragraph 14 of the statement of claim that Good to Go adopts the same or a similar construction.

21    In early March 2015, ASIC served on Good to Go a notice to lodge a written statement pursuant to s 49 of the Act, requiring Good to Go to provide information in response to a series of detailed questions about its credit activities. Over the subsequent months, ASIC continued to make enquiries about the credit activities of Good to Go.

22    In late March 2015, Ms Crawford, the nominated person in the condition set out above, resigned from Good to Go. (Ms Crawford did not leave immediately; she left on 1 May 2015.) Good to Go applied in March 2015 to vary the above condition of the licence so as to substitute Mr Jason Bousfield, who was the CEO of Good to Go. In the relevant ASIC form completed by Good to Go, in response to the question “Does the licensee rely on this person to demonstrate that it is competent to engage in credit activities (Responsible manager)?”, Good to Go answered “Yes”.

23    In May 2015, following an exchange of correspondence whereby further information was sought and provided regarding Mr Bousfield, ASIC said that it would not approve the substitution of Mr Bousfield. ASIC wrote to Good to Go in May 2015 in the following terms:

As you are aware, Good To Go, as a credit licensee, is responsible for ensuring that it maintains the organisational competence under s 47(1)(f) of the National Consumer Credit Protection Act 2009. This includes the responsibility of the licensee in making its own arrangements, to ensure that the licensee demonstrates adequate organisational competence in the regulated activities under its licence, is provided efficiently, honestly, and fairly.

Should Good To Go be unable to identify a suitable person to undertake the role of responsible manager it should consider applying to ASIC to suspend its credit licence.

24    In June 2015, Good to Go put forward the names of two other people (Ms Alison Campbell and Ms Lisa Bettencourt) seeking to have one or both of them substituted in the condition. Good to Go’s correspondence picked up the language of the Regulatory Guides, describing Ms Campbell and Ms Bettencourt as the two people Good to Go put forward as “responsible managers”.

25    In July 2015, following the exchange of further correspondence, ASIC said that it was not prepared to approve the substitution of either Mr Bousfield or Ms Campbell and sought further information regarding Ms Bettencourt. It is helpful for the discussion that follows to set out the relevant parts of ASIC’s email of 17 July 2015:

As you are aware your client, Good to Go Loans Pty Ltd (Good to Go) has been without a responsible manager since 1 May 2015. Further, Good to Go has provided no information to ASIC as to what systems it has in place to ensure ongoing compliance with the laws, outside providing further individuals to be considered as a responsible manager, being Jason Bousefield (sic), Alison Campbell and Lisa Bettencourt.

ASIC guidance in REG206 Credit Licensing: Competence and training states at paragraph 206.8 that an Australian Credit Licensee’s responsible managers must have (as well as relevant qualifications) as a minimum, at least two years problem-free experience.

ASIC has noted systemic concerns with Good to Go’s compliance with the National Consumer Credit Protection Act 2009 (National Credit Act) including the small amount lending laws. Your client was advised of these concerns in a meeting on 14 May 2015. Accordingly, ASIC does not view working with Good to Go Loans as problem free and ASIC is unable to approve a Responsible Manager whose experience is derived from being involved with and/or an employee of Good to Go.

As such Jason Bousefield (sic) (as advised on 26 May 2015) and Alison Campbell can not be approved.

…

In order for us to adequately assess Ms Bettencourt’s competencies, can you please provide further information to clarify what position/s Ms Bettencourt has held during her employment, the period of time she was in each position and the relevant duties aligned to each position including whether those duties were on behalf of Web Moneyline or any other entity.

26    As matters presently stand, although there has been further correspondence regarding Ms Bettencourt, ASIC has not accepted or rejected the substitution of Ms Bettencourt in the condition.

27    It should be noted that the fact that ASIC has not agreed to the substitution of any of the three people put forward by Good to Go does not, in and of itself, mean that Good to Go is in breach of its licence. The condition set out above requires Good to Go to do certain things in the event that Ms Crawford ceases to be an officer (such as applying for variation of the condition to substitute another person) and it is common ground that Good to Go has lodged with ASIC an application so to vary the condition.

28    In late July 2015, ASIC wrote to Good to Go to the effect that it had serious concerns with the company’s compliance with the Act, including the use of a particular type of credit contract. The letter also identified, as a further concern, that the company had been without a responsible manager since 1 May 2015. The letter also stated that the company had not provided information to ASIC as to the systems it has in place to ensure ongoing compliance with the laws and its internal policies, other than providing the names of further individuals to be considered as a responsible manager.

29    In August 2015, ASIC wrote to Good to Go stating that it was not satisfied with how Good to Go had sought to address ASIC’s concerns relating to non-compliance with the laws and ASIC continued to hold concerns as to the company’s current and future compliance with the law due to the lack of an appropriate responsible manager. ASIC stated that it was now pursuing administrative action to address its concerns, and Good to Go would receive notification from a delegate in due course. I was told by counsel for ASIC that the referral to the delegate does not necessarily mean that ASIC will seek suspension or cancellation of Good to Go’s licence. It is for the delegate to decide whether or not to seek suspension or cancellation. As things presently stand, the delegate has not yet made that decision. If he or she decides to seek suspension or cancellation, a hearing before ASIC is provided for under s 55 of the Act, as referred to above.

30    On 15 September 2015, this proceeding was commenced.

31    The position at present can be summarised as follows:

(a)    the key person nominated in the condition in Good to Go’s licence has ceased to be an officer of the company;

(b)    in accordance with the licence condition set out above, Good to Go has applied to ASIC for variation of the condition to substitute another person;

(c)    Good to Go has put forward the names of three people as substitutes;

(d)    ASIC has rejected two of the three people put forward by Good to Go and has not decided on the third;

(e)    ASIC has expressed concerns about whether Good to Go is complying with its obligations under the Act, and has referred the matter to a delegate, but the delegate has not yet made a decision whether or not to seek suspension or cancellation of Good to Go’s licence;

(f)    if ASIC’s delegate does decide to seek suspension or cancellation, there would be the opportunity for a hearing before ASIC under s 55 of the Act;

(g)    Good to Go has a current Australian credit licence, and the fact that ASIC has not agreed to the substitution of any of the three people put forward by Good to Go does not, in and of itself, mean that Good to Go is in breach of its licence.

Declarations sought

32    By its originating application, Good to Go claims four declarations on the grounds stated in the statement of claim. The four declarations are:

1.    A declaration that neither s 37 nor s 47 of National Consumer Credit Protection Act 2009 (‘Credit Act’) impose on the applicant a statutory requirement to:

(a)    Identify at least one person as a ‘responsible manager’ (RG 204.220)

(b)    Have responsible managers with at least two years relevant problem free experience and either:

(i)    credit industry qualification to at least the Certificate IV Level; or

(ii)    another general relevant higher level qualification (e.g. a diploma or University degree) (RG 206.8)

2.    A declaration that the respondent has no proper basis to refuse to vary clause 2 of the applicant’s Credit Licence (No 439808) to substitute for Ms Kathryn Gay Crawford one or more or each of Mr Jason Bousfield, Ms Alison Campbell and/or Ms Lisa Bettencourt.

3.    Further or alternatively, a declaration that the applicant is not acting in contravention of sub-section 47(f) of the Credit Act by continuing to operate a credit business pursuant to its Credit Licence (No 439808) in the absence of an approval by the respondent of the people who manage the applicant’s credit business as ‘responsible managers’ for the purpose of the respondent’s Regulatory Guides 204 and 206.

4.    Further or alternatively, a declaration that the respondent has no power to suspend or cancel the applicant’s Credit Licence (No 439808), or impose additional licence conditions, pursuant to sub-section 55(1) of the Credit Act, because of the absence of an approval by the respondent of the people who manage the applicant’s credit business as ‘responsible managers’ for the purpose of the respondent’s Regulatory Guides 204 and 206.

33    The statement of claim sets out, in narrative form, correspondence and other communications between the parties, rather than grounds as such.

34    The issue raised by ASIC’s interlocutory application is whether Good to Go has a reasonable prospect of success within the meaning of s 31A of the Federal Court of Australia Act 1976 (Cth) or r 26.01 of the Federal Court Rules 2011 (Cth).

35    On the one hand, ASIC contends (in brief summary) that the declarations sought by Good to Go do not give rise to a justiciable controversy because the questions raised are abstract or hypothetical or may not arise.

36    On the other hand, Good to Go contends (again, in brief summary) that a crystallised dispute has arisen with respect to the questions inherent in each of the declarations sought.

Applicable principles

37    Section 31A(2) of the Federal Court of Australia Act 1976 (Cth) provides that the Court may give judgment for one party against another in relation to the whole or any part of a proceeding if the first party (here, ASIC) is defending the proceeding or that part of the proceeding and the Court is satisfied that the other party (here, Good to Go) has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. A proceeding or part of a proceeding need not be hopeless or bound to fail for it to have no reasonable prospect of success: s 31A(3).

38    Rule 26.01(1)(a) of the Federal Court Rules 2011 (Cth) is in substantially the same terms.

39    In Spencer v The Commonwealth of Australia (2010) 241 CLR 118 (Spencer), Hayne, Crennan, Kiefel and Bell JJ stated (at [53]) that:

… s 31A departs radically from the basis upon which earlier forms of provision permitting the entry of summary judgment have been understood and administered. Those earlier provisions were understood as requiring formation of a certain and concluded determination that a proceeding would necessarily fail.

40    At [56], their Honours continued:

Because s 31A(3) provides that certainty of failure (“hopeless” or “bound to fail”) need not be demonstrated in order to show that a plaintiff has no reasonable prospect of prosecuting an action, it is evident that s 31A is to be understood as requiring a different inquiry from that which had to be made under earlier procedural regimes.

41    At [58]-[60], their Honours concluded as follows:

[58]    How then should the expression “no reasonable prospect” be understood? No paraphrase of the expression can be adopted as a sufficient explanation of its operation, let alone definition of its content. Nor can the expression usefully be understood by the creation of some antinomy intended to capture most or all of the cases in which it cannot be said that there is “no reasonable prospect”. …

[59]    In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like “clearly”, “manifestly” or “obviously”) as “frivolous”, “untenable”, “groundless” or “faulty”. But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word “reasonable”, in the phrase “no reasonable prospect”, be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a “frivolous”, “untenable”, “groundless” or “faulty” claim.

[60]    Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is “no reasonable prospect” of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to “no reasonable prospect” can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase “just and equitable” when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes.

42    A broadly similar approach was taken by French CJ and Gummow J at [22]-[26]. Both the judgment of Hayne, Crennan, Kiefel and Bell JJ and the judgment of French CJ and Gummow J referred to the continuing need for caution before summarily terminating a proceeding. In Australian Securities and Investments Commission v Cassimatis (2013) 220 FCR 256 at [11], [13]-[23], [25], and [29]-[41], Reeves J reviewed the judgments in Spencer and relevant authorities of this Court on the operation s 31A.

43    For the purposes of this summary dismissal application, it is also necessary to consider the principles relating to jurisdiction and justiciability.

44    Although not referred to in the originating application or statement of claim, Good to Go in its submissions identified s 187 of the Act, coupled with s 21 of the Federal Court of Australia Act 1976 (Cth), as the provisions it relies on to found the Court’s jurisdiction. Section 187(1) confers jurisdiction on this Court “in relation to civil matters arising under this Act”. The terms of s 187(1) are similar to the general conferral of jurisdiction on this Court contained in s 39B(1A)(c) of the Judiciary Act 1903 (Cth), which provides that the original jurisdiction of this Court includes jurisdiction in any matter “arising under any laws made by the Parliament” other than criminal matters. (I note that s 186 of the Act provides that the Division in which s 187 is located, namely Div 2 of Pt 4-3 of Ch 4, applies to the exclusion of s 39B of the Judiciary Act.)

45    As can be seen, both s 187 of the Act and s 39B(1A) of the Judiciary Act confer jurisdiction on this Court in respect of “matters”. The word “matter” in each of these provisions no doubt has the same meaning as it has in Ch III of the Commonwealth Constitution: see, in relation to s 39(1A), Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at [50]-[51] and [54] per Gleeson CJ, Gaudron and Gummow JJ; and Tay v Migration Review Tribunal (2009) 178 FCR 1 at [25]-[33] per Besanko J.

46    The concept of a “matter” requires, in a context such as the present, that there be a real controversy between parties, as distinct from a party seeking answers to questions which are abstract or hypothetical: see Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at [45]-[47] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ; and Re McBain; ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372 at [5] per Gleeson CJ, [242] per Hayne J.

47    The principles relating to justiciability are to like effect. It is a cardinal principle that declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 582 per Mason CJ, Dawson, Toohey and Gaudron JJ, citing In re Judiciary and Navigation Acts (1921) 29 CLR 257. Relief will not be granted, for example, if relief is “claimed in relation to circumstances that [have] not occurred and might never happen”: University of New South Wales v Moorhouse (1975) 133 CLR 1 at 10 per Gibbs J, cited with approval in Ainsworth at 582.

Application of principles to present case

48    The first declaration sought in the originating application (set out above at [32]) concerns the construction of ss 37 and 47 of the Act. In summary, Good to Go seeks a declaration that neither s 37 nor s 47 of the Act impose on Good to Go a requirement to identify at least one person as a ‘responsible manager’ being a person with the qualifications and experience set out in Regulatory Guides 204 and 206.

49    The threshold issue that arises is whether ASIC has in fact adopted the position implicitly ascribed to it in the declaration sought (namely that the Act requires Good to Go to identify a ‘responsible manager’ having the qualifications and experience set out in the Regulatory Guides). Having reviewed the documents and correspondence passing between the parties, in my view it is clear that ASIC has not adopted a position that ss 37 and 47 of the Act require Good to Go to identify at least one person as a ‘responsible manager’ with the qualifications set out in the Regulatory Guides. In these circumstances, there is no controversy between ASIC and Good to Go about the question underlying the first declaration sought. It seeks an answer to a question which is hypothetical or abstract, because ASIC is not contending to the contrary of the proposition encapsulated in the declaration.

50    It is true that much of the correspondence is directed to ASIC approving a replacement key person for the purposes of the key person condition, and the correspondence (on both sides) in many places refers to this person as the ‘responsible manager’. But this flowed from the existence of the key person condition in the licence and the requirement that Good to Go take certain steps in the event that the key person ceased to be an officer of the company. One of the available steps (being that described in paragraphs (c)(i)-(iii) in the key person condition) was to lodge with ASIC an application for variation of the condition so as to substitute a new key person. This is the course that Good to Go adopted. The references to a replacement key person or responsible manager arose in that context. This does not indicate that ASIC adopted a position that the Act required Good to Go to have a ‘responsible manager’. It merely reflects the way in which Good to Go chose to address the departure of Ms Crawford. Indeed, that ASIC did not adopt such a position is made plain by the alternative course of action open to Good to Go under paragraph (c)(iv) of the key person condition. This provided that if the licensee was not proposing to rely on any replacement key person, the licensee was to provide a detailed description of how the licensee would continue to comply with the Act and the conditions of the licence.

51    Senior counsel for Good to Go relied on the judgment of Dawson J in Oil Basins Ltd v Commonwealth of Australia (1993) 178 CLR 643 at 648-9 and 651. In that case, Dawson J rejected a summary dismissal application brought by the defendants to a claim for (among other things) declaratory relief. However, there are significant differences between the circumstances of that case and the present proceeding. In that case, the plaintiff sought a declaration that it was not liable to pay petroleum resource rent tax (PRRT) in circumstances where there was an arbitration on foot involving a dispute about the amount payable to the plaintiff under a royalty agreement with some of the defendants (the producers) and the producers claimed that some of the PRRT paid by them was paid on behalf of the plaintiff and that they were entitled to deduct the amount paid from the royalty payments. In these circumstances, Dawson J held (at 648-9) that it was plain that the plaintiff had a real interest in obtaining the declaration, and that the question raised by the plaintiff was neither abstract nor hypothetical. In the present case, however, because ASIC has not adopted the position implicitly ascribed to it, Good to Go does not have a real interest in obtaining the declaration sought, and the question raised is abstract or hypothetical.

52    For these reasons, in my view, there is no real controversy underlying the claim for the first declaration, and the question to which the declaration is directed is abstract or hypothetical. Accordingly, I am satisfied that Good to Go has no reasonable prospect of successfully prosecuting its claim for the first declaration.

53    The second declaration sought in the originating application (set out in paragraph [32] above) seeks to challenge ASIC’s refusal to vary the key person condition to substitute for Ms Crawford one or more of Mr Bousfield, Ms Campbell and Ms Bettencourt. A declaration is sought that ASIC had “no proper basis” for so refusing.

54    As noted above, while ASIC has refused to accept Mr Bousfield and Ms Campbell, it has not yet made a decision regarding Ms Bettencourt.

55    The second declaration appears to invite the Court to undertake some form of merits review of ASIC’s rejection of Mr Bousfield and Ms Campbell as substitutes for Ms Crawford in the key person condition. However, it is well established that this Court does not have jurisdiction or power to undertake merits review: see, eg, Foster v Minister for Customs and Justice (1999) 164 ALR 357 at [7] per Drummond J.

56    Even if the second declaration is read as confined to judicial review type grounds (eg, jurisdictional error) it runs into significant difficulties. No such grounds appear in the statement of claim or were contended for in the submissions other than the same contention that underlies the first declaration. To the extent that the second declaration seeks to traverse the same ground as the first declaration, it runs into the same problems.

57    For these reasons, I am satisfied that Good to Go has no reasonable prospect of successfully prosecuting its claim for the second declaration.

58    The third declaration sought in the originating application (set out in [32] above) is that Good to Go is not acting in contravention of s 47(f) of the Act in the absence of an approval by ASIC of the people who manage Good to Go’s credit business as ‘responsible managers’ for the purposes of ASIC’s Regulatory Guides 204 and 206.

59    Although differently expressed, there is considerable overlap between this proposed declaration and the first. Again, Good to Go is seeking to resolve a question as to whether a provision of the Act requires it to have a ‘responsible manager’ as described in the Regulatory Guides. It is implicit that Good to Go contends that the Act does not so require, and that ASIC contends that the Act does so require.

60    The problem, however, is that the documents and correspondence do not indicate that ASIC has adopted the position that is implicitly ascribed to it by the third declaration. The documents and correspondence do not indicate that ASIC contends that Good to Go is in contravention of s 47(1)(f) of the Act by continuing to operate a credit business in the absence of approval by ASIC of a ‘responsible manager’. As discussed in connection with the first declaration, the documents and correspondence need to be read in the context of the key person condition in Good to Go’s licence, and the method adopted by Good to Go to address the departure of Ms Crawford.

61    For these reasons, no real controversy exists about the question which underlies the third declaration sought, and the question to which it is directed is abstract or hypothetical. Accordingly, I am satisfied that Good to Go has no reasonable prospect of successfully prosecuting its claim for the third declaration.

62    The fourth declaration sought in the originating application (set out in [32] above) is to the effect that ASIC has no power to suspend or cancel Good to Go’s licence, or to impose additional licence conditions, because of the absence of approval by ASIC of the people who manage the credit business as ‘responsible managers’ for the purposes of Regulatory Guides 204 and 206.

63    There is some similarity between this declaration and the first and third declarations in that each proceeds from the premise that ASIC has adopted a position that Good to Go must have a ‘responsible manager’ approved by ASIC. For the reasons given above, ASIC has not adopted that position.

64    More specifically, the fourth declaration is premised on ASIC having adopted a position that it has the power to suspend or cancel Good to Go’s licence, or to impose additional conditions, because of the absence of approval of a ‘responsible manager’. The difficulty with this premise is that the documents and correspondence do not demonstrate that ASIC has adopted this position. Again, the correspondence needs to be read in light of the key person condition in Good to Go’s licence and the course adopted by Good to Go to address the departure of Ms Crawford.

65    Moreover, in circumstances where ASIC has not made a decision to suspend or cancel Good to Go’s licence, or to impose additional conditions, the question whether it has power to do so on a certain basis is premature or may not arise. ASIC may not decide to do any of these things. Even if ASIC did decide to do one of these things, it may do so on a different basis. As these scenarios demonstrate, it would be potentially inefficient and wasteful for the Court to deliberate upon the fourth declaration at this stage.

66    For these reasons, I am satisfied that Good to Go has no reasonable prospect of successfully prosecuting its claim for the fourth declaration.

67    This is not a case where there are disputed issues of fact or law, or mixed fact and law, and the task on an application for summary dismissal is assessing the strength or weakness of the applicant’s case against the “reasonable prospect of success” standard. Rather, this is a case where the respondent contends, broadly, that the claims made by the applicant are not justiciable because they are abstract or hypothetical or may never arise. This is a type of argument that lends itself to summary determination because it is not affected by evidence that may be adduced at trial. Nor does determination at this stage inhibit the development of the law in an area where it may be appropriate to have the issues fully ventilated at trial. For the reasons set out above, in my view, the proceeding suffers from threshold difficulties such that it falls into the category of case that is untenable, groundless or faulty (expressions referred to in the passage from Spencer quoted above), although of course these are not necessary epithets for a proceeding to have no reasonable prospect of success.

Other arguments

68    ASIC also advanced an argument based on abuse of process but, in view of the conclusions I have reached, it is not necessary for me to deal with this argument.

Conclusion

69    For the foregoing reasons, I am satisfied that Good to Go has no reasonable prospect of successfully prosecuting any of the four declarations set out in its originating application. That being the entirety of the relief claimed, and it not being suggested that the points raised by ASIC could be overcome by reformulating the declarations sought, the proceeding should be summarily dismissed.

Associate:

Dated:    1 December 2015