Gould v Companies Auditors and Liquidators Disciplinary Board

Federal Court of Australia|2009-09-11|Before: Lindgren J

THE COURT ORDERS THAT:

The questions of law raised in the applicant's Further Amended Supplementary Notice of Appeal filed in Court on 11 December 2008 be answered as follows: Question 1: Whether the true legal effect of the resolutions in issue was merely to set the basis or hourly rates of the applicant's fees and that they did not determine or approve or fix the amount (or any amount) of his fees? No Question 2: Whether the true legal effect or construction of the IPAA Guidelines in question, was that no upper limit or cap was required to be included in the resolutions in issue? No Question 3: Whether the Tribunal acting reasonably, judicially and properly instructed as to the law was required to find that the resolutions in issue were not intended by the applicant to determine the amount of his fee? No Question 4: Whether the Tribunal, contrary to law, denied the applicant procedural fairness by finding that the resolutions in question were intended by the applicant to determine the amount of his fee? Not necessary to answer Question 4A: Whether the Tribunal erred in failing to provide reasons for rejecting the Applicant's evidence that the resolutions were only or merely intended to approve the basis of his fees not any actual remuneration or, alternatively, erred in failing to have regard to the applicant's evidence to this effect? Not necessary to answer Question 5: Whether the Tribunal misapplied the onus of proof or otherwise acted contrary to law in drawing an adverse inference from the absence of evidence of the applicant seeking approval of a fee amount later? Not necessary to answer Question 6: Whether the Tribunal erred in law in taking into account an irrelevant consideration, being the absence of evidence of the applicant seeking approval of the fee amount later and the personal state of mind of the applicant towards the resolutions in question? Not necessary to answer Question 7: Whether the true legal effect of the IPAA Guidelines in question was not to set a mandatory professional standard and, therefore, they could not be a "duty" or "function" within the meaning of 1292(2)(d)(i) and (ii) of the Corporations Act? Yes Question 8: Whether the Tribunal acting reasonably, judicially and properly instructed as to the law was required to dismiss Contentions 2.6, 4.4 and 6.3? Yes Question 9: Whether the letters in question were "business letters" within the defined meaning of a "public document" set out in s 88A(1)(c) of the Corporations Law? No Question 10: Whether the letters in question "purport" to be "signed by or on behalf of the company" within the defined meaning of a "public document" set out in s 88A(1)(c) of the Corporations Law? No Question 11: Whether the Tribunal acting reasonably, judicially and properly instructed as to the law was required to dismiss Contentions 2.9 and 4.6? Yes Question 12: Whether the Tribunal erred in law in holding that "it would be unreasonable to expect the respondent to adduce direct evidence, such as its document receipt log or the documents themselves"? No Question 13: Whether the Tribunal erred in law in taking into account an irrelevant consideration, being that "In the normal course of commercial and government business today, such original documents might well have been archived long ago and might be difficult, if not impossible, to retrieve"? No Question 14: Whether the Tribunal acting reasonably, judicially and properly instructed as to the law was required to find that the second respondent had failed to prove that the documents in issue had been lodged one day late? No Question 14A: Whether the Tribunal erred in law in admitting and placing weight upon the invoices (C14 60-62) and the letter of Mr Steinkellner (C18 68) as evidence of the date of lodgement of the Forms? No Question 14B: Whether the Tribunal's finding that the Forms were lodged on 12 November 1998 was made without evidence or other material to justify it or was unreasonable or unfair? No Question 15: Whether the Tribunal, contrary to law, denied the applicant procedural fairness in finding that the applicant breached his "duty to perform the work with reasonable care and skill and in an efficient and economical way" by failing to "allow a margin of a couple of days to guard against the risk of late delivery"? No Question 15A: Whether the Tribunal's above finding of breach of duty was made without evidence or other material to justify it, or was so unreasonable that no Tribunal could have found a breach of duty? No Question 16: Whether the Tribunal acting reasonably, judicially and properly instructed as to the law was required to find that the late lodgement fee was a proper expense within the meaning of s 556(1)(a) of the Corporations Law? No Question 17: Whether the Tribunal, contrary to law, denied the applicant procedural fairness by making the adverse findings as to the applicant's credit at [229] of the decision? Yes Question 18: Whether no person acting reasonably, judicially and properly instructed as to the law could have made the adverse findings as to the applicant's credit at [229] of the decision? Yes Question 19: Whether the Tribunal erred in law in taking into account an irrelevant consideration, being that the applicant's application for a waiver of fees strongly suggests that he believed he was personally liable for them? Yes Question 20: Whether the Tribunal erred in failing to deal with and uphold the applicant's submission that at the time the applicant had a lien over all of the funds in the liquidation for his fees and that all such funds were in due course payable to him as would have been known to the applicant at the time? No Question 21: Whether the Tribunal acting reasonably, judicially and properly instructed as to the law was required to dismiss Contention 6.5? No Question 22: Whether the Tribunal acting reasonably, judicially and properly instructed as to the law was required to dismiss Contentions 6.6 and 6.7 because: (a) the statement of the charge failed to identify with sufficient precision the allegation being made and the Tribunal refused the second respondent leave to amend to supply such particulars; and/or Yes (b) there was no evidence or other material to justify the upholding of the Contention? Yes Question 23: Whether the Tribunal had jurisdiction to hear and determine Contentions 2.1, 6.5, 6.6 and 6.7A? Yes Question 24: Whether the Tribunal in order to protect the applicant from oppressive conduct or unfair dealing by the second respondent was required at law to dismiss or to decline to deal with Contentions 2.1, 6.5, 6.6 and 6.7A? No

general division NSD 1590 of 2008

AND: COMPANIES AUDITORS AND LIQUIDATORS DISCIPLINARY BOARD

INTRODUCTION 1 On 27 August 2009 I made the orders that appear at the front of these reasons for judgment for the reasons that appear or are referred to below. The orders relate to (a) orders other than an order as to costs, and (b) costs. I address those two topics below under those headings. 2 The orders were consequential upon two earlier judgments that I have given in this proceeding and another related proceeding: Gould v Companies Auditors and Liquidators Disciplinary Board [2009] FCA 475 and Gould v Companies Auditors and Liquidators Disciplinary Board (No 2) [2009] FCA 846 (together, Earlier Reasons for Judgment). 3 I will take the Earlier Reasons for Judgment as read and will use the same abbreviated forms of reference that I used in them.

General 4 The parties made detailed submissions as to the orders to be made, and, particularly in the case of Mr Gould, in relation to what were "decisions" of the AAT within s 44 of the AAT Act. 5 Subsection (1) of s 44 of the AAT Act provides that a party to a proceeding before the AAT may appeal to this Court on a question of law from any "decision" of the AAT in that "proceeding". 6 Subsection (4) of s 44 of the AAT Act empowers the Court to: "make such order as it thinks appropriate by reason of its decision". The orders that may be made include (subs 5) an order affirming or setting aside the decision of the Tribunal and an order remitting the case to be heard and decided again, either with or without the hearing of further evidence, by the Tribunal in accordance with the directions of the Court. 7 It is important to identify the AAT's decision from which the appeal was brought, but also to note the breadth of the power to make orders given by s 44(4). 8 In his notice of appeal by which he commenced this proceeding, Mr Gould identified the decision appealed from as the AAT's decision given on 12 September 2008 by which the AAT decided that CALDB's decision under review was affirmed. At [16]ff below I discuss what was that decision under review. First, however, because Mr Gould's submissions were directed to them, I note certain features of the AAT's reasons for decision. 9 In its reasons for decision, the AAT identified the issues before it as follows (at [7]): (i) Whether the applicant failed: (a) within the meaning of s 1292(2)(d)(i) of the Act, to carry out or perform adequately and properly the duties of a liquidator; and/or (b) within the meaning of s 1292(2)(d)(ii) of the Act, to carry out or perform adequately and properly the duties or functions required by an Australian law to be carried out or performed by a registered liquidator; in such a manner as would warrant the tribunal considering making an order under the Act in relation to each of the contentions set out in the statement of facts and contentions (SoFaC) filed on 15 March 2005 by the second respondent in these proceedings. (ii) If so, was such conduct a failure of the applicant to carry out or perform adequately and properly the duties of a liquidator or the duties or functions required by an Australian law to be carried out or performed by a registered liquidator? (iii) If yes to paragraph 7(ii) above, what order or orders, if any, should be made? 10 At [255] the AAT gave its findings in relation to the respective Contentions, and at [256] it answered issues (i) and (ii) above in the affirmative and affirmed the decision of CALDB that was under review. The date of the CALDB decision that was under review was 21 December 2004 (see below). 11 The AAT noted (at [256]) that it had been agreed that if it answered issues (i) and (ii) in the affirmative, a further hearing would be held to deal with the question of the appropriate orders to be made. In view of the appeal to this Court, the AAT ordered a stay on CALDB's suspension of Mr Gould's registration as a liquidator (see below). 12 Mr Gould's submissions to this Court referred to three possible candidates for the description of "decision" of the AAT within s 44: the affirming of the decision under review; the answering of issues (i) and (ii); and the making of the findings in response to the Contentions. 13 In a sense, these three candidates lie on a continuum. The affirming of the decision under review was the ultimate decision that the AAT made. The answering of issues (i) and (ii) laid the statutory foundation provided for in s 1292(2)(d) of the Corporations Act for the making of an operative order. The making of the findings in response to the Contentions was an antecedent step, not provided for in the Act, but arising out of the particular allegations made by ASIC in the circumstances of the particular case. Mr Gould's submissions treated those findings as potentially forming a 'decision' where there was also a determination on the part of the AAT that a Contention, if established, signified a failure on the part of Mr Gould to perform his general duties or functions within the meaning of s 1292(2)(d). 14 Counsel for Mr Gould referred to Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 (Bond). Bond concerned an application for review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) which referred in s 3(1) to "a decision of an administrative character made… under an enactment". This is not the language of s 1317B(1) of the Act or of s 44 of the AAT Act. However, s 1317B(1) of the Act provides that subject to Pt 9.4A of the Act, application may be made to the AAT for review of "a decision made under [the] Act" by, relevantly, CALDB. The terms of s 1317B(1) are therefore, relevantly, in pari materia with the language of the provision that was considered in Bond. 15 What is important to note, however, is that the appeal to this Court was from the AAT's decision affirming CALDB's decision under review. At least this much is clear: the AAT's decision affirming the decision that was under review is a decision in the present case referred to in s 44 of the AAT Act.

What was that "decision under review" that the AAT affirmed? 16 The instrument of determination of CALDB dated 26 August 2004 incorporated: · the making of findings in response to the respective Contentions; and · a statement that CALDB was satisfied that Mr Gould had failed within the meaning of s 1292(2)(d) of the Act to carry out or perform adequately and properly (i) the duties of a liquidator, and (ii) the duties or functions required by an Australian law to be carried out or performed by a registered liquidator. CALDB deferred consideration of the orders to be made consequential on the determination. After submissions, on 21 December 2004 CALDB made the orders that were set out at [7] of the first of the Earlier Reasons for Judgment. 17 It cannot be the case that the AAT affirmed the order of suspension and other orders of 21 December 2004 because the AAT stated expressly (at [256]) that it had been agreed that a further hearing would have to be held to deal with the question of the appropriate orders to be made by it. 18 Nor did the AAT's affirmation extend to CALDB's findings on the Contentions: the AAT set out its own findings on them. 19 This leaves for consideration the following statement of CALDB's satisfaction: we have determined that we are satisfied that Vanda Russell Gould has failed within the meaning of s1292(2)(d) to carry out or perform adequately and properly the duties of a liquidator and the duties or functions required by an Australian law to be carried out or performed by a registered liquidator. 20 Did the AAT's affirmation of the decision under review extend to this statement? 21 It is doubtful that it did because, in answering issue (i) which the AAT set for itself, the AAT addressed for itself the very Contentions that had been covered in CALDB's statement of its satisfaction set out above. 22 If the decision of CALDB that was under review before the AAT included CALDB's statement of its satisfaction, that statement would be set aside by an order of the Court setting aside the AAT's decision that CALDB's decision be affirmed. It might then be appropriate to regard the AAT's own independent answering of issues (i) and (ii) as merely steps on the way to its own decision affirming the decision under review. On this basis, the AAT's answers to issues (i) and (ii) in the affirmative would not themselves be "decisions" within the meaning of s 44 to be separately dealt with. 23 It was clear to me when I made the orders of 27 August 2009 that there had to be an order setting aside the AAT's decision affirming the decision under review. As the above discussion makes clear, however, there was a question whether the AAT's answers to issues (i) and (ii) were "decisions" of the AAT that needed to be dealt with. It was for that reason that I expressed order 4 in the terms in which I did (I concede that it is not a model of felicitous expression, but nothing will turn on this).

Other matters 24 At [255] the AAT summarised its decisions that various Contentions were "dismissed" or "established" and evidently, by virtue of one or more of those that were established, that Mr Gould had failed to carry out or perform adequately and properly "the duties of a liquidator" or "the duties or functions required by an Australian law to be carried out or performed by a registered liquidator", as the case may be. At [256] the AAT concluded that issues (i) and (ii) were "therefore" to be answered in the affirmative, without considering the effect over all of the result that particular Contentions had been found to be established, while others had not been. 25 Whereas issues (i) and (ii) raised matters provided for expressly in s 1292(2)(d), the making of the findings in response to the respective Contentions did not do so. The findings were not, on any reckoning, "decisions" within s 44 of the AAT Act: they were conclusions reached along the way in the course of reasoning that led the AAT to answer the issues in the way that it did and to affirm the decision under review; cf Bond at 337 per Mason CJ. 26 At [102]-[104] of the first of the Earlier Reasons for Judgment I emphasised that s 1292(2)(d) of the Act called for an exercise of assessment, evaluation and judgment in relation to the registered liquidator's conduct. I said that it was not enough, for example, in a mechanical and arithmetical way, simply to seek to identify a minimum of two failures to perform adequately and properly particular duties. 27 ASIC has submitted that the Court's finding in relation to Contention 6.5 alone means that the AAT's decision should be affirmed. I do not agree. This is not just because I answered certain questions (17, 18 and 19) relating to Contention 6.5 adversely to ASIC: even if ASIC had enjoyed complete success on Contention 6.5, it would not follow that s 1292(2)(d) of the Act had been satisfied. 28 I accept Mr Gould's submission, however, that while the findings in relation to the individual contentions are not "decisions", the Court has power to direct that those Contentions be dealt with in accordance with the Court's reasons. In the case of Contentions 2.6, 2.9, 4.4, 4.6 and 6.3, the position is plain: the AAT must find that those Contentions are "dismissed" to use the AAT's terminology. The reason is that in relation to each of them, a question (question 8 as to Contentions 2.6, 4.4 and 6.3 and question 11 as to questions 2.9 and 4.6) asked specifically whether the Tribunal acting reasonably, judicially and properly instructed as to the law was required to dismiss the Contention and that question was answered "Yes". 29 In relation to Contention 6.5, questions 17, 18 and 19 were answered favourably to Mr Gould and the remaining questions concerning that Contention (questions 12, 13, 14, 14A, 14B, 15, 15A, 16, 20 and 21) were answered favourably to ASIC. The answering of questions 17, 18 and 19 favourably to Mr Gould means that the AAT's finding that Contention 6.5 was established must be set aside and that the matter, in so far as it relates to Contention 6.5, must be remitted to the AAT to be determined in accordance with law and the Earlier Reasons for Judgment. 30 The matter in so far as it relates to Contention 2.11 must also be remitted to the AAT to be determined in accordance with law, and the Earlier Reasons for Judgment.

costs 31 I turn now to the question of costs. 32 Mr Gould submits that there should be an order that ASIC pay his costs of the appeal because costs should follow the event and he was successful in having the AAT decision set aside and the matter remitted. While it is true, as Mr Gould submits, that the matter must be remitted to the AAT to be reconsidered on a quite significantly different basis, I think that the issues that were determined were clearly separate and divisible and that the general rule should not be allowed to operate in the present case. Accordingly, I do not accept Mr Gould's primary submission that he should have his costs. 33 I have attached to these reasons my analysis of the success and failure of the respective parties by reference to questions. A "questions approach" is not entirely satisfactory because many questions were not truly distinct and independent of others but merely a different ways of expressing an issue. Moreover, some questions were divided into two parts and so could each count as two questions. 34 ASIC submits that it succeeded on 18 questions and Mr Gould succeeded on 11. As appears in the annexure, my count is that ASIC succeeded on 17 questions and Mr Gould on 11 or 12. 35 If one turns to the Contentions, Mr Gould submits that he succeeded on five of the six Contentions that he challenged, and ASIC succeeded on one of the four Contentions that it raised by its Notice of Contention. In the result, according to Mr Gould, he succeeded in respect of eight of the 10 Contentions. 36 Another approach which Mr Gould advances, in the alternative, is to consider the six broad areas of debate as analysed in the Earlier Reasons for Judgment. In his submissions, Mr Gould identifies his measure of success as follows: Part A: Contentions 2.6, 4.4 and 6.3 - total success in favour of Mr Gould. Part B: Contentions 2.9 and 4.6 - total success in favour of Mr Gould. Part C: Contention 6.5 - approximately 50% success in favour of Mr Gould as the findings tantamount to fraud were set aside, but otherwise the finding as to whether a late fee was a proper expense was lost by Mr Gould. Part D: Contentions 6.6 and 6.7A - total success by Mr Gould. Part E: The jurisdictional issue - Mr Gould did not succeed. Part F: ASIC's Notice of Contention - Mr Gould won 3 out of the 4 issues and ASIC won the fourth. 37 Mr Gould submits that on either the "Contentions" approach or the "grouping of issues" approach, ASIC should be ordered to pay 70-80% of his costs. 38 Mr Gould also suggests that a word count reveals that the Earlier Reasons for Judgment contain approximately 15,180 words in total, of which 11,055 words (72.8%) related to Contentions in respect of which Mr Gould succeeded, and 4,125 words (or 27.2%) related to Contentions in respect of which ASIC succeeded. Mr Gould concludes that this again supports an order that ASIC pay something in the order of 70-80% of his costs. 39 It is necessary to take a general view and while I reject Mr Gould's submission that ASIC should simply be ordered to pay his costs, I think that ASIC should be ordered to pay a sizeable part of Mr Gould's costs by reference to the substance of the matter. I put to one side the questions approach and the word count approach. The Contentions and groupings of issues approaches are preferable but are not entirely satisfactory because they do not discriminate as to difficulty and significance. 40 Making the best assessment that I could, I thought that the appropriate order was that ASIC pay 60% of Mr Gould's costs. I took into account by way of amelioration in favour of ASIC the difficulty associated with aspects of Contention 6.5, the fact that question 23 related to four of the Contentions, and Mr Gould's unsuccessful attempt following the handing-down of reasons to re-agitate Contention 2.11. 41 The Earlier Reasons for Judgment and the reasons set out above are the reasons why I made the orders on 27 August 2009 to which I referred at the outset. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.

Associate: Dated: 11 September 2009 Counsel for the Applicant: Mr R Dubler SC

Solicitor for the Applicant: Henry Davis York

Counsel for the Second Respondent: Mr G McNally SC

Solicitor for the Second Respondent: Kim Turner of the Australian Securities and Investments Commission

A FAILURE TO CAP REMUNERATION IN ACCORDANCE WITH IPAA GUIDELINES Contentions 2.6, 4.4 and 6.3. 9 Questions: 1-8, four not necessary to answer, leaving five Gould: 2 ASIC: 3

B NON COMPLIANCE WITH s 450E(2) BY FAILURE TO STATE "(SUBJECT TO DEED OF COMPANY ARRANGEMENT)" Contentions 2.9 and 4.6 3 Questions: 9, 10 and 11 Gould: 3 ASIC: Nil

C PAYMENT OF TWO LATE LODGEMENT FEES FROM COMPANY'S ASSETS AS EXPENSES OF THE LIQUIDATION Contention 6.5 13 Questions: 12, 13, 14, 14A, 14B, 15, 15A, 16, 17, 18, 19, 20, 21 Gould: 3 ASIC: 10

D CONTRAVENTION OF s 1308(4) IN RESPECT OF LODGEMENT OF FORMS 524 Contentions 6.6 and 6.7A 1 or 2 Questions: 22(a) and (b) Gould: 1 or 2 ASIC: Nil

E WHETHER the AAT HAD JURISDICTION TO ENTERTAIN CONTENTIONS 2.1, 6.5, 6.6 AND 6.7a Contentions 2.1, 6.5, 6.6, 6.7A 2 Questions: 23, 24 Gould: Nil ASIC: 2

F AMENDED NOTICE OF CONTENTION Contentions 2.1, 2.11, 6.6, 6.7A Questions: 1(a), (b), 2, 2A, 3(a), (b) 2 not necessary or inappropriate to answer, leaving 4 Gould: 2 ASIC: 2 Result: Gould: 11 or 12 ASIC: 17

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Judgment (18 paragraphs)

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