Frugtniet v Australian Securities and Investments Commission

• Jurisdiction: Australia Federal only
• Judge: Kiefel CJ,Keane,Nettle JJ.,Bell,Gageler,Gordon,Edelman JJ.
• Judgment Date: 15 May 2019
• Neutral Citation: [2019] HCA 16
• Date: 15 May 2019
• Court: High Court
• Docket Number: M136/2018

[2019] HCA 16

HIGH COURT OF AUSTRALIA

Kiefel CJ, Bell, Gageler, Keane, Nettle, Gordon and Edelman JJ

M136/2018

Rudy Frugtniet

Appellant

and

Australian Securities and Investments Commission

Respondent

Representation

M H O'Bryan QC with J P Wheelahan for the appellant (instructed by SBA Law)

S B Lloyd SC with R C Knowles for the respondent (instructed by Australian Securities and Investments Commission)

Administrative Appeals Tribunal Act 1975 (Cth), ss 25, 43.

Crimes Act 1914 (Cth), Pt VIIC, ss 85ZM, 85ZV, 85ZW, 85ZZH(c).

National Consumer Credit Protection Act 2009 (Cth), ss 80, 327.

Administrative law (Cth) — Administrative Appeals Tribunal — Nature and scope of review — Where appellant's convictions spent under Pt VIIC of Crimes Act 1914 (Cth) — Where Div 3 of Pt VIIC of Crimes Act prohibited Australian Securities and Investments Commission (“ASIC”) from taking into consideration spent convictions in deciding to make banning order — Where review of decision of ASIC by Administrative Appeals Tribunal — Where s 85ZZH(c) of Crimes Act provided that Div 3 of Pt VIIC does not apply to Commonwealth tribunal — Whether Administrative Appeals Tribunal entitled to take into consideration on review spent convictions which ASIC was prohibited from taking into consideration.

Words and phrases — “banning order”, “fit and proper person”, “function of the original decision-maker”, “review”, “spent conviction”, “stand in the shoes of the decision-maker”.

ORDER

• 1. Appeal allowed.

• 2. Set aside orders 2 and 3 of the orders made by the Full Court of the Federal Court of Australia on 12 October 2017 and, in their place, order that:

  “2. Appeal allowed.

  3. Order 1 of the orders made by Bromberg J on 22 August 2016 and the order made by Bromberg J on 15 September 2016 be set aside and, in their place, order that the decision made by the Administrative Appeals Tribunal on 6 March 2015 be set aside and the matter be remitted to the Administrative Appeals Tribunal for reconsideration in accordance with law.”

• 3. The respondent pay the costs of the appellant in this Court.

1 Kiefel CJ, Keane and Nettle JJ. Section 80(1)(f) of the National Consumer Credit Protection Act 2009 (Cth) (“the NCCP Act”) provides that the Australian Securities and Investments Commission (“ASIC”) may make a banning order against a person if ASIC has reason to believe that the person is not a fit and proper person to engage in “credit activities” 1. Perforce of s 80(2) of the NCCP Act, and s 85ZW of the Crimes Act 1914 (Cth), ASIC must not take account of “spent convictions” in determining whether it has reason to believe that the person is not fit and proper 2. Section 327 of the NCCP Act provides for review by the Administrative Appeals Tribunal (“the AAT”) of a decision by ASIC to make a banning order. Section 85ZZH(c) of the Crimes Act provides in effect, and so far as is relevant, that s 85ZW of the Crimes Act does not apply to a tribunal established under Commonwealth law. The AAT is a tribunal established under Commonwealth law. The question for decision in this appeal is whether, on review of a decision of ASIC to impose a banning order, the AAT may take spent convictions into account. For the reasons which follow, the question should be answered, no, and the appeal should be allowed.

Relevant legislative provisions

2 Section 80(1)(f) of the NCCP Act provides that ASIC may make a banning order against a person “if ASIC has reason to believe that the person is not a fit and proper person to engage in credit activities”.

3 “Credit activity” is defined by s 6 of the NCCP Act in substance as including where the person is carrying on a business of providing or performing the obligations or exercising the rights of a provider of a credit service, consumer leases, or mortgages, or the person is a beneficiary of a guarantee or exercises the rights of a beneficiary of a guarantee, or is a person who engages in prescribed credit activities.

4 Read together, ss 81 and 82 of the NCCP Act provide in substance that the effect of a banning order is that the person against whom it is made must not engage in credit activities for the period of the banning order, subject to any express provision allowing the person to do specified acts that the order would otherwise prohibit.

5 Section 80(2) of the NCCP Act relevantly provides in substance that (subject to Pt VIIC of the Crimes Act), in making a decision whether to impose a banning order, ASIC must have regard to certain considerations including the criminal convictions of the person within ten years before the banning order is proposed to be made and any other matter ASIC considers relevant.

6 Section 85ZW of the Crimes Act (which is in Div 3 of Pt VIIC of that Act) provides in substance and so far as is relevant that, subject to Div 6, but despite any other Commonwealth law, or any State law or Territory law, the fact that a person has been charged with or convicted of an offence that is spent shall not be taken into account by a Commonwealth authority.

7 Section 85ZM provides in substance and so far as is relevant that a “conviction” includes a finding of guilt without entry of conviction and that a conviction is a “spent conviction” if the person was not sentenced to imprisonment for the offence, or was not sentenced to imprisonment for the offence for more than 30 months, and the waiting period for the offence has ended. The “waiting period” is defined in s 85ZL, so far as is relevant, as ten years in the case of a person not dealt with as a minor.

8 Section 85ZZH(c) (which is in Div 6 of Pt VIIC) provides, however, in effect that Div 3 of Pt VIIC does not apply, inter alia, to the taking into account of information by a court or tribunal established under a Commonwealth law, a State law or a Territory law, for the purpose of making a decision, including a decision in relation to sentencing.

9 Section 327 of the NCCP Act provides so far as is relevant that a person affected by a decision made by ASIC under s 80(1)(f) of that Act may make an application to the AAT for review of the decision.

10 Section 43 of the Administrative Appeals Tribunal Act 1975 (Cth) (“the AAT Act”) provides so far as is relevant that for the purpose of reviewing a decision, the AAT may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing affirming, varying, or setting aside the decision under review. If the AAT sets aside the decision under review, it must make a decision in substitution for the decision so set aside or remit the matter for reconsideration in accordance with any directions or recommendations of the AAT.

The facts

11 The appellant has a criminal record which includes being convicted in the United Kingdom in 1978 of 15 counts of handling stolen goods, forgery, and obtaining property by deception and theft (for which he was sentenced to a term of imprisonment and served two years) and by a finding (in Australia) by the Broadmeadows Magistrates' Court in 1997 that he committed an offence of obtaining property by deception in relation to the issue of airline tickets (for which no conviction was entered but he was fined $1,000) (“the spent convictions”).

12 In determining that the appellant was not a fit and proper person to engage in credit activities, ASIC was precluded by s 80(2) of the NCCP Act from having regard to the spent convictions. On application for review of that decision, the AAT approached the review on the basis that it was entitled to, and it did, take the spent convictions into account because the convictions were “evidence of dishonest conduct that [was] relevant under the policy guidelines”.

Proceedings below

13 On appeal to the Federal Court of Australia on a question of law as to whether the AAT took into account matters it was obliged to ignore, the primary judge (Bromberg J), adopting the reasoning of Middleton J in Toohey v Tax Agents' Board of Victoria 3 concerning comparable Victorian legislation, as being, in Bromberg J's view, directly on point and not plainly wrong, held 4 that the prohibition in s 85ZW of the Crimes Act against ASIC taking spent convictions into account did not apply to the AAT in the conduct of a merits review of ASIC's decision, by reason of s 85ZZH(c) of that Act. An appeal to the Full Court of the Federal Court (Reeves, Farrell and Gleeson JJ) was dismissed 5. In reaching their decision, the Full Court were of the view 6 that the reasoning of White J, in dissent, in Kocic v Commissioner of Police, NSW Police Force 7, regarding comparable New South Wales legislation, was persuasive and fortified their conclusion that the primary judge did not make any error in concluding that the AAT was entitled to take the spent convictions into account.

The nature of administrative merits review

14 The enactment of the AAT Act established a new and substantially unprecedented 8 regime of administrative merits review, distinguished principally by the AAT's jurisdiction to re-exercise the functions of original administrative decision-makers 9. The question for determination by the AAT on the review of an administrative decision under s 25 of the AAT Act is thus whether the decision is the correct or preferable decision 10. That question is required to be determined on the material before the AAT, not on the material as it was when before the original decision-maker 11. As Bowen CJ and Deane J held 12 in Drake v Minister for Immigration and Ethnic Affairs, however, and has since been affirmed by this Court in Shi v Migration Agents Registration Authority 13, the AAT is not at large. It is subject to the same general constraints as the original decision-maker and should ordinarily approach its task as though it were performing the relevant...