Doherty v Inspector-General in Bankruptcy

LEGISLATIVE FRAMEWORK 5 Division 8 of Part IX of the Act regulates, inter alia, the registration and deregistration of DAAs. Section 186C(2) of the Act relevantly provides: Approval of application made by an individual (2) If: (a) the applicant is an individual; and (b) the application is not by way of renewal; the Inspector-General must approve the application if the Inspector-General is satisfied that the applicant: (c) passes the basic eligibility test; and (d) has the ability (including the knowledge) to satisfactorily perform the duties of an administrator in relation to debt agreements; and (e) has such qualifications and experience (if any) as are prescribed by the regulations. Otherwise the Inspector-General must refuse to approve the application. 6 The Inspector-General in Bankruptcy ('the Inspector-General') refused Mr Doherty's application for registration as a RDAA on the following grounds: (a) he failed to demonstrate sufficient understanding of certain duties of a RDAA; (b) he failed to demonstrate adequate knowledge in relation to the accounting of debt agreement funds, including the necessary reconciliations required by a RDAA in relation to their fiduciary duties and the holding of a trust account that complies with the Act; (c) he lacked sufficient knowledge of his obligations in relation to certain charges and related procedures; (d) he failed to demonstrate sufficient knowledge of his duties to inform creditors and ITSA of default payments; and (e) he failed to demonstrate a detailed knowledge of the relevant legislation. 7 Before the Tribunal it was acknowledged by the Inspector-General that Mr Doherty satisfied the basic eligibility test and that he held the requisite qualifications and experience required by the Bankruptcy Regulations 1996 (Cth) ('the Regulations'). 8 Pursuant to ss 186C(6) and 186Q of the Act the Inspector-General is empowered to formulate guidelines to assist in the administration of the DAA scheme ('the Guidelines'). In summary, the Guidelines are made to ensure that only suitably qualified persons are appointed as RDAAs. One guideline provides information to explain the requirement contained in s 186C(2). It states: 1.2 In order for a person to become registered it is necessary for them to pass a basic eligibility test, have mandatory qualifications and demonstrate they have the ability (including the knowledge) to immediately perform satisfactorily the duties of a debt agreement administrator. In making a decision, the Inspector-General's delegate will take into consideration information obtained by interviewing the applicant and an inspection of the applicant's systems and practices. If necessary, an applicant can also be required to complete a written examination. [Emphasis added] 9 For reasons outlined below, the Tribunal member concluded at [124] of the decision that Mr Doherty did not 'have the ability (including knowledge) to satisfactorily perform the duties of a RDAA', thereby finding that his application to be a RDAA did not satisfy s 186C(2)(d) of the Act.

APPLICATION TO THIS COURT 10 Mr Doherty submits that the decision of the Tribunal is infected by legal error. The questions of law so relied upon may be summarised as follows: 1. Whether the Tribunal's conclusion that Mr Doherty did not have the ability, including the knowledge, to perform the duties of a RDAA was unreasonable in the Wednesbury sense; 2. Whether the Tribunal's conclusion that Mr Doherty did not have the ability, including the knowledge, to perform the duties of a RDAA 'involved seriously irrational or illogical fact finding'; 3. Whether the Tribunal's findings that Mr Doherty had not adopted certain recommendations to change his existing system involved substantive unfairness in view of the conduct of the hearing; 4. Whether the Tribunal provided adequate reasons for its conclusion that Mr Doherty did not have the relevant ability to perform the duties of a RDAA.

THE EVIDENCE 11 The Tribunal held a hearing which extended over five days, during which both parties adduced evidence. The Inspector-General called four witnesses, each of whom was extensively cross-examined by Mr Doherty. Representing himself at the Tribunal, Mr Doherty called one witness, namely Mr Robert Richardson, a part time real estate agent and property teacher who, inter alia, taught trust accounting at TAFE. 12 Mr Richardson provided a report which expressed his opinion that the trust account records maintained by Mr Doherty as a DAA complied with the necessary requirements. The report contained three recommendations, namely: (i) The Cash Book balance should be brought down at the end of each month and then brought forward to begin the Cash Book receipts for the new month; (ii) If this Trust Account becomes larger then thought should be given to providing each Client's Ledger with an identifying number so that it could be noted in the corresponding Cash Book entry and then a space on the Client Ledger to note the page number of the Cash Book where the original entry was made before being posted to that Ledger; (iii) Some new templates be designed and used for the Cash Book, Ledgers, Trial Balance and Bank Reconciliation so that consistency of entry, balancing and notation is maintained throughout the month. 13 Mr Richardson provided his evidence before the Tribunal on 18 April 2012. At the conclusion of the hearing on that day, the proceeding was adjourned until 5 July 2012. 14 On 6 July 2012, Mr Doherty tendered a supplementary statement of Mr Richardson. The supplementary statement relevantly stated: 1. I have found the completed books of account to be presented in a way that generally conforms to established bookkeeping principles. This is not to say that the way in which Mr Doherty previously completed and presented the monthly accounts was wrong, especially given the lack of direction by both the Bankruptcy Act 1966 and the Inspector General's Guidelines. 2. I have ascertained that both the credit and debit entries contained in the Bank Statement have been correctly and accurately reported in the Trust Cash Book Receipts and Payments (I have not sighted the individual client ledgers). 3. As demonstrated in my Key to understanding the April books of account and evidenced by the books themselves, the Trust Account of the Debt Genie balances for the month of April 2012. 15 Mr Doherty informed the Tribunal that he had adopted Mr Richardson's recommendations. The following exchange occurred between the Tribunal member and Mr Doherty concerning such statement: MR DOHERTY: It's just a short supplementary statement showing that we are using his new recommended style of reporting for trust accounts. MS ISENBERG: That you've adopted his recommendations, is that - - - MR DOHERTY: I've adopted his recommendation. It's just a confirmation that I've adopted his recommendation. MS ISENBERG: Mr Fary, do you anticipate that you would be wanting to cross-examine Mr Richardson? MR FARY: Probably not. But it just depends on how transparent the documents are. 16 During the cross-examination of Mr Doherty by counsel for the Inspector-General, the following exchange occurred in relation to recommendation 2: MR FARY: Thank you. Recommendation 2: If this trust account becomes larger then thought should be given to providing each client's ledger with an identifying number so that it can be noted on the corresponding cash book entry, and then a space on the client's ledger to note that the page number of the cash book where the original entry was made before being posted to that ledger. Has that recommendation been implemented? MR DOHERTY: Not at the moment because I didn't see a need in regard to the numbers that we're talking about here to implement it, but, obviously, there will be a need to implement that at some future date, and I probably - I will take your point, counsel. I'm willing to do that within the next week.

TRIBUNAL FINDINGS 17 The Tribunal member extensively considered the recommendations of Mr Richardson. The relevant extracts from the decision are: 104. Mr Richardson made a number of recommendations to Mr Doherty and created templates for use for cashbook ledgers, trial balance and bank reconciliation, so that consistency of entry, balancing and notations would be maintained throughout the month. 105. The first recommendation is that each month a balance is brought down on the cashbook so that the final figure on the cashbook can be seen as to what has been spent. It appeared that the balances were not brought forward. 106. The second recommendation was to just set up some templates for the trial balance and the bank reconciliation so that they are in better order. Presently there is some lack of clarity in that the trial balance and the bank reconciliation have been mixed or the results of those have been mixed. He could figure it out himself but it needed Mr Doherty's input to see explain it. In his report he said that Mr Doherty's method was not the accepted method of balancing. 107. His third recommendation was for some new templates to be used for the cashbook and ledgers so as to be able to cross-reference a cashbook entry with the ledger. In the size of Mr Doherty's present practice there is no need for cross-referencing but if Mr Doherty were anticipating within the next six months getting 50 matters, it would make things easier. 108. Initially Mr Doherty did not ask him to help implement the changes he had recommended but they have since spoken and Mr Doherty now thinks it's a 'most excellent idea'. Mr Richardson said he is prepared to implement the changes for Mr Doherty and give him some training. To date Mr Doherty had not yet asked him to do so. Mr Richardson said the changes would be easy to make. 109. If Mr Doherty were to implement his recommendations an external third party could look at the accounts without input from Mr Doherty and understand them. 110. Mr Doherty said he did not need instructions in how to use the templates because he knows how to use them. Mr Doherty said it is essentially the same as what he had been doing with the only difference being that Mr Richardson had linked one month to the next. 111. The proposed system still did not link all the documents and required manual cutting and pasting or manually retype an entry from one to another. Mr Doherty re-iterated that there was no requirement to do so. He understood that that was an ongoing criticism but re-iterated that no mistake had been found to date. When pressed he said he would 'look into' automatic links. 112. Mr Doherty was referred to Mr Richardson's recommendation that if the trust account becomes larger then thought should be given to providing each client's ledger with an identifying number so that it can be noted on the corresponding cash book entry, and then a space on the client's ledger to note that the page number of the cash book where the original entry was made before being posted to that ledger. That recommendation had not been implemented, but he said he was willing to do so. 18 From [114]-[118], the Tribunal member considered Mr Doherty's 'ability' to be a RDAA in the context of s 186C(2)(b) of the Act. Those paragraphs state: 114. It is clear from its context in s 186C(2)(d) of the Act 'ability' in is a broader concept than just "knowledge". In determining whether the test is satisfied, it is necessary to have regard to the important function of regulation of a DAA. Mr Doherty himself referred to some examples of difficult circumstances of people that he would have to deal with as a RDAA and that is a reason why there needs to be a high standard set for the ability of RDAAs. "Ability" also has to take into account important public policy considerations, and they include ensuring the integrity of the entire DAA system and the performance of duties and obligations under the Bankruptcy Act. 115. Fundamental to the Respondent's concerns about Mr Doherty's 'ability' is an apprehension that his current practices in his existing, unregulated role of not more than five debt agreements, will not suffice in a larger, commercially viable practice as a RDAA. His application for registration relates to his proposed practice which, he told the inspector, would consist of 50 debt agreements within six months. In evidence, he seemed to indicate that he had no way of telling how many matters he would undertake and appeared to have made little, if any, effort to work that out, given time and resources restraints. From his evidence he stated he wanted to run a viable business, that he has at least one debt of nearly $100,000; that he is running currently on a subsistence basis; and having regard to the setup costs including the cost of registration itself, I consider it likely that he will seek to run a business with as many debt agreements as possible. 116. What Mr Doherty proposes appears to be a reactive system, in other words, to change his systems once there is a problem. In assessing the proposed system, I note his stated position that he will have no support staff other than those doing non-essential tasks, which, on his evidence, appeared to be somewhat minimal. 117. On the basis of the Applicant's evidence and his demonstration in particular, I had significant reservations about his existing system's ability to deal with his anticipated practice size. In his demonstration, for example, he appeared confused as to how to deal with some types of entries - especially in relation to a dishonoured cheque - and whether they could be properly recorded with 'a minus', or if they should be recorded in different columns and appropriate formulae. His performance was unimpressive. 118. 'Ability', it was submitted by the Respondent, necessarily includes an ability to be regulated, that is, to accept the role of a regulator and to accept the requirement to submit to regulator's requirements. While I do not agree with this interpretation, in my view, the preparedness to respond to a regulator's reasonable requirements anchored in the Act and the Guidelines, is essential to the performance of the duties of a RDAA. 19 At [119] the Tribunal observed: Somewhat belatedly, given that it is now some months since matters were brought to his attention, on the final day of hearing, Mr Doherty said that he was happy to adopt Mr Richardson's recommendations, to do a checklist and to look at a computer program. He denied he had been uncooperative with the regulator. I specifically asked him, why I should come to a view that he would indeed do those things when, notwithstanding having been given those significant pointers, he had not done them in the intervening months. His response was to offer to give the Tribunal an undertaking to produce documents, including a checklist within a week. He would not submit those documents to the Respondent because he thought it would just 'lead to further argument'. He contended that if the Respondent was really serious about this they would have produced a recommended checklist for him to use and told him what computer program to use. I reject his submission that the Respondent is responsible for providing him with what essentially are tools of trade. I also reject his offer to provide documents to the Tribunal - that is not the Tribunal's role. His lack of preparedness to respond to requests from the regulator led me to the view that he had been unco-operative and would be likely to remain so. 20 The Tribunal continued at [121]-[123]: 121. Overall I am not confident that he will adopt the recommendations of Mr Richardson, and that if he did so, it would be at a time when his practice had already come under strain. That strain necessarily puts both his clients and their creditors at risk. 122. The test requires more than mere latent ability. It requires Tribunal to be positively satisfied that not only can Mr Doherty perform the tasks satisfactorily, but that he will. In that regard, his past conduct in failing to respond to the regulator's requirements suggests to me that, despite his experience in conducting matters to date, he does not have a preparedness to conduct matters as a RDAA in accordance with the legitimate requirements of the regulator. 123. As to the relevance of Mr Doherty's experience, albeit with only a limited number of files, I observe Mr Doherty's own analogy that his singing karaoke for 20 years does not make him a better singer. There was no allegation that Mr Doherty's practice as an unregistered DAA has been unsatisfactory. It might be said that, in circumstances where an applicant to be a RDAA has adequately conducted a small number of matters to date, then, having regard to the on-going inspection regime and the cancellation rights available to the Respondent, that an appropriate course might be for the Tribunal to disregard the Respondent's - or its own - apprehensions about Mr Doherty's future ability to satisfactorily perform the duties of a RDAA. It seems to me that this 'wait and see' approach would be imprudent. In the meantime Mr Doherty would be responsible for managing the debts of many people, some of whom, on his own evidence, could be characterised as vulnerable. His ability must be assessed in the context of his proposed practice size. I am not prepared to accept that his systems, although having sufficed to date, would be adequate to make that transition. Neither am I prepared to accept his belated offers of undertaking to address perceived inadequacies and to adopt the advice of his retained adviser. These were simple things that could have been done to address those matters and it is frankly, inexplicable that he had not done so. It is trite to say 'actions, speak louder than words' but Mr Doherty had ample opportunity to amend his practice in light of the regulator's observations and his adviser's recommendations but he did not do so.

SUBMISSIONS 21 The principal grounds of review relied upon by Mr Doherty each turn upon what he describes as a misconception by the Tribunal concerning the implementation of the recommendations of Mr Richardson. Such misconception is primarily based upon two statements of the Tribunal in its reasons for decision. The first is at [121] of the decision where the Tribunal member stated 'I am not confident that [Mr Doherty] will adopt the recommendations of Mr Richardson'. The second statement at [123] reads 'Mr Doherty had ample opportunity to amend his practice in light of the regulator's observations and his adviser's recommendations but he did not do so'. Mr Doherty submits that the Tribunal member did not recognise that the first and third recommendations of Mr Richardson had been implemented by Mr Doherty. 22 The Inspector-General submits that any such misconception claimed by Mr Doherty does not constitute an error of law. This is in part because the Tribunal member did not ignore the evidence nor misinterpret it; rather the Tribunal member had regard to evidence of Mr Richardson. Further, it is submitted that even if the Tribunal did ignore or misconceive the evidence as claimed, this does not constitute an error of law for the purposes of s 44 of the Administrative Appeals Tribunal Act 1975 (Cth).

CONSIDERATION 23 The evidence on the issue of implementation of the recommendations is confusing. On 5 July 2012, Mr Doherty unequivocally told the Tribunal that Mr Richardson's recommendations had been implemented. Yet the following day, Mr Doherty conceded that he had not implemented the second recommendation, as it only required him to give thought to providing 'each client's ledger with an identifying number…' which he would do when his business expanded: see [16] above. The Inspector-General did not dispute before this Court the assertion that Mr Doherty had implemented the first and third recommendations. 24 The scope of the second recommendation was explained by Mr Richardson in cross-examination before the Tribunal. He stated that 'my second recommendation was to just set up some templates for the trial balance and the bank reconciliation so that they are in better order'. Mr Richardson explained to the Tribunal that the templates would adopt the proper and established methods of bookkeeping relating to bank reconciliation adjustments; cashbook adjustments; comparing the client ledgers to the cashbook; and separating the sum of unpresented cheques from the trial balance. 25 The decision of the Tribunal at [104]-[107] demonstrates that the Tribunal had a clear understanding of each of the recommendations made by Mr Richardson. In particular, at [112] the Tribunal member referred to the fact that Mr Richardson had recommended that if the trust account becomes larger 'then thought should be given to providing each client's ledger with an identifying number' to enable the corresponding entry to be made in the cash book with a cross-reference in substance to the client ledger. Mr Doherty acknowledged that such recommendation had not yet been implemented. Having considered these matters in detail, the Tribunal member then concluded at [121] that she was not 'confident that [Mr Doherty] would adopt the recommendations of Mr Richardson'. 26 Upon judicial review, a court must consider the whole of the reasons of an administrative decision-maker rather than focus on isolated sentences or statements. The Tribunal decision, the relevant portions of which have been extracted above, makes clear that the Tribunal member did not believe that Mr Doherty had the requisite ability, as required by s 186C(2)(d) of the Act, to be a RDAA for numerous reasons, including the fact that Mr Doherty had not adopted all of the recommendations of Mr Richardson. 27 In reviewing the reasons of the Tribunal, the Court is mindful of the statement in Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272 where Brennan CJ, Toohey, McHugh and Gummow JJ said: [T]he reasons of an administrative decision-maker are meant to inform and not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed. [Reference omitted] 28 The applicant's submissions at first sight appear to raise valid concerns that the Tribunal overlooked the fact that the first and third recommendations of Mr Richardson had been implemented. However in making her findings at [121] and [123] the Tribunal member was not descending to the level of detail where each recommendation was separately considered. Rather, the Court concludes that the Tribunal member was referring generally to the implementations of Mr Richardson's recommendations as a whole. It would have been preferable for clarity for the Tribunal member to note that Mr Doherty had adopted the first and third recommendations, but it was not strictly necessary for her to do so. The Tribunal member was concerned to ensure that Mr Doherty's bookkeeping would be transparent. That is, that the financial records would be understandable to a third party without having to rely upon explanation by Mr Doherty: see [109] of the decision (reproduced above at [17]). Mr Doherty's records did not comply with the whole of Mr Richardson's recommendations when the hearing was resumed on 5 July 2012. It was in this sense that the Tribunal member found that Mr Richardson's recommendations had not been put into practice. 29 Upon a reading of the whole of the relevant reasons, the Court is satisfied that there is no basis for finding that the Tribunal member misunderstood the evidence by stating that Mr Doherty had not adopted Mr Richardson's recommendations, and erred by assuming that all the recommendations of Mr Richardson had not been implemented. 30 The Court has considered Mr Doherty's submission that the second recommendation was conditional; it only required him to consider adopting the bookkeeping procedures suggested by Mr Richardson when his trust account expanded. Such submission however is not inconsistent with the Tribunal member's reasons. At [116], the Tribunal member characterised Mr Doherty's system as being 'reactive'. At [123], the Tribunal member found Mr Doherty's ability to be a RDAA had to be assessed in the context of his proposed practice size, and that it was 'inexplicable' that he had not adopted the advice from Mr Richardson nor accepted the observations from the regulator. Clearly the Tribunal member considered that, amongst other reasons, by not having adopted every part of Mr Richardson's recommendation, Mr Doherty failed to demonstrate the ability to satisfactorily perform the duties of a RDAA, as required by s 186C(2) of the Act. 31 Counsel for Mr Doherty stated at the hearing that each of the four grounds of Mr Doherty's application to this Court were founded on the Tribunal member's alleged misconception of the evidence. Those grounds fall away given that the Court has found that there was no such misconception, Even if the Tribunal member did misconceive the evidence however, the Court considers that Mr Doherty's application would fail for the reasons set out below.

Wednesbury unreasonableness 32 For a decision to be unreasonable in the Wednesbury sense, it must be 'so unreasonable that no reasonable authority could ever have come to it': Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 230. The basis of Mr Doherty's submission in this sense is that the ultimate finding of the Tribunal, namely that he did not have the ability (including the knowledge) to perform satisfactorily the duties of a RDAA, was founded upon the Tribunal member's alleged misconception of the evidence. 33 In determining whether RDAA applicants have such ability, the Inspector-General, and by extension the Tribunal, are invested with a very broad discretion. As noted above at [8], the Guidelines provide that the Inspector-General will 'take into consideration information obtained by interviewing the applicant and an inspection of the applicant's systems and practices.' In exercising this power upon review of the Inspector-General's initial decision to refuse Mr Doherty's application, the Tribunal member was entitled to take into account facts and circumstances at the time of the Tribunal hearing: Shi v Migration Agents Registration Authority (2008) 235 CLR 286 at [50]-[55] and [98]-[101]. 34 At [32]-[34] of the decision, the following is recorded: 32. [Mr Doherty] did not actually think there was a point at which it would become unmanageable to do all of the crucial or professional work himself, because he would not take on further files if it started to get out of control. He agreed his proposal was for a reactive rather than proactive system. 33. He did not know to what size he wanted to grow the practice and he has no business plan. He said it should not be assumed he wanted it to be as large as possible. If registered, he said he would probably engage in some advertising to attract clients. If it proved too successful, attracting, for example, 100 clients all at once he would have to turn some away. 34. He did not accept that his current systems would need to be substantially altered if his practice were to increase to 20 matters. 35 The Tribunal member was obviously concerned that Mr Doherty lacked the requisite ability to conduct a large volume of financial transactions, and was 'reactive'. The Court interprets such finding to mean that Mr Doherty was mindful of the need to change his methods or practices only after problems or errors occurred in the course of his business. It follows, and it is reflected in the reasons of the Tribunal member, that Mr Doherty's financial accounting system at the time of the hearing was insufficient for the proposed expansion of his practice. 36 The Tribunal member also referred to other matters of concern however, including: (a) The significant weight to be attached to the fact that Mr Doherty did not answer various questions asked of him by the Inspector-General in its questionnaire which tested his knowledge and understanding of procedures to be adopted as a RDAA; (b) That Mr Doherty had been found in the appeal proceeding to be lacking in respect of management of his solicitor's trust account, even though no dishonesty had been found; (c) That Mr Doherty's subscription to an online valuation service for real estate was regarded by him as adequate, yet Mr Richardson suggested it did not provide a very accurate assessment of the value of real estate. A witness called by the Inspector-General maintained that a 'curbside' valuation was necessary for the valuation of a client's real estate; (d) That Mr Doherty did not comply with Guideline 2.7.9 in that he did not have the recommended checklist. The Tribunal member noted that Mr Doherty considered that a checklist was unnecessary as he was able to handle large numbers of legal matters without such a checklist and could do the same as a RDAA; (e) That Mr Doherty had not been able to display to the Inspector-General any system for identifying three and six months arrears defaults by debtors, nor was there any provision in Mr Doherty's existing system for a permanent record of payments due and dates of default. Such deficiencies would put debt agreements made between debtors and creditors in jeopardy; and (f) That Mr Doherty displayed an unco-operative attitude towards the Inspector-General. The Tribunal member noted Mr Doherty's criticism of the Local Court assessor's finding in connection with his business 'The Debt Genie' that his advertising was misleading and deceptive and that he had failed to take any steps to remove the offending advertisement until the day before the hearing in his application. 37 A high standard of proficiency and trust is required of a RDAA to administer financial and other records of bankrupts. Even if the Tribunal member had erred in finding that Mr Doherty had not adopted any of Mr Richardson's recommendations, the ultimate finding that Mr Doherty did not have the ability to satisfactorily perform the duties of a RDAA was not so unreasonable that no reasonable authority could ever have come to it.

Irrational or illogical fact finding 38 Generally, an assertion that a decision is illogical, unreasonable or irrational is not a ground which by itself constitutes a basis for review. In Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 198 ALR 59, Gleeson CJ said at [5]: As was pointed out in Minister for Immigration v Eshetu, to describe reasoning as illogical, or unreasonable, or irrational, may merely be an emphatic way of expressing disagreement with it. If it is suggested that there is a legal consequence, it may be necessary to be more precise as to the nature and quality of the error attributed to the decision-maker, and to identify the legal principle or statutory provision that attracts the suggested consequence. [Footnotes omitted] 39 Relevantly his Honour continued at [9]: To describe as irrational a conclusion that a decision-maker is not satisfied of a matter of fact, or a state of affairs, because the decision-maker does not believe the person seeking to create the state of satisfaction, or to describe the process of reasoning leading to such a conclusion as illogical, on judicial review of an administrative decision, might mean no more than that, on the material before the decision-maker, the Court would have reached the required state of satisfaction. 40 Later in the same paragraph his Honour continued: It is often unhelpful to discuss, in the abstract, the legal consequences of irrationality, or illogicality, or unreasonableness of some degree. In a context such as the present, it is necessary to identify and characterise the suggested error, and relate it to the legal rubric under which a decision is challenged. 41 Counsel for Mr Doherty noted that in the circumstances of the present proceeding, the ground of illogical or irrational fact finding established a 'higher test' than that pertaining to Wednesbury unreasonableness. Indeed, counsel for Mr Doherty relied on the same reasoning and the same alleged error for both grounds. As such, this ground would fail for the reasons set out above in relation to the ground alleging Wednesbury unreasonableness.

Substantive unfairness 42 This ground of the application was initially based on the allegedly unfair conduct of the matter before the Tribunal. In light of all of the circumstances, counsel for Mr Doherty properly resiled from such argument in oral submissions. Instead the argument was couched in terms of procedural unfairness. It was submitted that the Tribunal member's finding that Mr Doherty had not adopted the recommendations of Mr Richardson, being the alleged erroneous finding of fact, was not put to Mr Doherty. 43 The extent to which procedural fairness is to be afforded by the Tribunal to a party was considered by the Full Court of this Court in Teuila v Minister for Immigration and Citizenship (2012) 59 AAR 98 ('Teuila'). Edmonds, Flick and McKerracher JJ stated at [14] that: A ground alleging a denial of procedural fairness by the Tribunal is ultimately to be founded upon the obligation set forth in s 39 of the Administrative Appeals Tribunal Act 1975 (Cth). That section expresses the requirement as a duty to "… ensure that every party is given a reasonable opportunity to present his or her case …". The section, it has been said, "reflects the common law requirement of procedural fairness": Daw v Minister for Immigration & Citizenship [2012] FCA 705 at [3] per Edmonds J. Whether the requirement imposed upon the Tribunal by s 39 is co-extensive with the common law requirements is a question which may presently be left to one side. The section, it has long been recognised, does not require the Tribunal to ensure that a party takes the "best advantage" of the opportunity: Secretary, Department of Family and Community Services v Verney [2000] FCA 570 at [45], 60 ALD 737 at 748. See also: Sullivan v Department of Transport (1978) 20 ALR 323 at 343 where Deane J (with whom Fisher J agreed) observed that "[n]either the Act nor the common law imposes upon the Tribunal the impossible task of ensuring that a party takes the best advantage of the opportunity to which he is entitled". Appl'd: De Simone v Federal Commissioner of Taxation [2009] FCAFC 181 at [15], 51 AAR 161 at 167 per Sundberg, Stone and Edmonds JJ; Kenso Marketing (M) SDN BHD v Chief Executive Officer of Customs [2011] FCAFC 26 at [45] per Keane CJ, Downes and Gordon JJ. 44 As referred to above, the hearing before the Tribunal extended over five days during which witnesses were examined and cross-examined for both parties. Mr Doherty was directly questioned during cross-examination as to Mr Richardson's recommendations, and was specifically asked by counsel for the Inspector-General whether the first two recommendations had been adopted. Further, Mr Doherty was asked by the Tribunal member whether he was using the templates referred to by Mr Richardson in his third recommendation. 45 In these circumstances, there is no doubt that Mr Doherty was given a 'reasonable opportunity to present his case': Teuila at [14]. There was no requirement for the alleged erroneous finding of fact by the Tribunal member to be put to Mr Doherty. Indeed, the circumstances in which such a misconception could be put to Mr Doherty are difficult to conceive. First, the misconception could only possibly be put by the Tribunal member. Counsel for the Inspector-General could not be expected to know that the Tribunal member had misunderstood evidence unless the Tribunal member made a statement during the hearing to that effect. If such a statement were made, it may be presumed that Mr Doherty would correct it in the course of the hearing. Secondly, the Tribunal member would have to form the misconception during the hearing, not afterwards upon her review of the evidence.

Adequacy of reasons 46 This ground of Mr Doherty's application was not advanced in any substantive way. It appears that the challenge to the adequacy of the Tribunal member's reasons is merely another attempt to characterise the alleged error of fact as a reviewable error of law. 47 For completeness, the Court notes that the provision of adequate reasons is essential. In Kentucky Fried Chicken Pty Ltd v Gantidis (1979) 140 CLR 675, Stephen J said at 682: Where appellate administrative Tribunals are required by statute to include in their decisions a statement of the reasons for arriving at them there will be little difficulty in assigning some significance to silence; it will at the least reveal a failure to comply with the requirement of the statue and may go so far as to impugn the decision itself, particularly where some statement of reasons does appear but omitted from it are considerations relevant to the determination of the matter in issue. 48 The Tribunal member has provided full and comprehensive reasons for her findings and clearly addressed the issue of Mr Richardson's recommendations at length. Even if the Tribunal member had misconceived the evidence, such a factor would not have affected the adequacy of her reasons. 49 The Court orders that the application be dismissed with the costs of the Inspector-General to be paid by Mr Doherty. I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy.