Jorgensen v Australian Securities & Investment Commission

(i) Was Lotusdale a "relevant body"? 5 It is true that s 600(2) requires a relevant body to be a section 600 body at the time of service of the Show Cause Notice but that condition is satisfied if within the period of the previous seven years there has been a liquidator's report of the kind specified. The Commission is not denied jurisdiction even if the matters in the report have been partially or wholly rectified. That would simply go to the merits of whether the Commission should make a prohibition order. This was the view taken by Waddell CJ in Dwyer v National Companies and Securities Commission (1988) 13 ACLR 716 at 720. I therefore reject the applicant's submission on this point.

(ii) Solvency 6 Once there has been a s 533 report into two or more relevant bodies in respect of which an individual is a relevant person, the jurisdiction to make a prohibition order is established. It does not matter that by the time the Show Cause Notice the company's creditors have been fully paid, or paid to more than 50 cents in the dollar. The Commission is at liberty to make a prohibition order in the light of all the circumstances.

(iii) Liquidator's Notice 7 This was simply a question of fact. One time-honoured technique of a fact finder faced with competing assertions is to consider the motives each protagonist might have for being untruthful. As will be seen, the applicant had declined the opportunity to appear in person or to have the liquidator examined so there was not much else the Delegate could do. This was a question of fact and no legal error has been shown.

(iv) Natural Justice 8 On 10 March 1998, following upon the service of the Show Cause Notice, the applicant's solicitor Mr Tim McHenry wrote to the Commission stating that his client "requires an opportunity to be heard", that he usually resided in Cairns and consequently would need "significant notice" of the intended hearing date. On 12 March 1998 the Commission replied to Mr McHenry advising that the applicant's "Opportunity to be Heard" would commence on 21 April 1998 at the Commission's Melbourne office. The letter referred to ss 51-62 of the Australian Securities Commission Act 1989 dealing with procedures at hearings and pointed out that the applicant could request the Commission's Delegate to issue a summons to any other person to be a witness. The letter noted that a copy of the principal documents on which the Commission would rely at the "Opportunity" had been provided to the applicant. At no time did the applicant or his solicitor request the issue of any summons for witnesses, including the liquidators or receivers and managers that had made reports to the Commission in respect of the relevant bodies. 9 On 20 April 1998 the applicant's solicitors sent a fax to the Commission advising that the applicant would be unable to attend the hearing listed for the following day. The fax said: "Mr Jorgensen advises that he has pressing personal problems which have prevented him from undertaking serious preparation of his case in answer to the show cause notice and he would in all events be 'under prepared' at a hearing tomorrow. Obviously our client can only request an adjournment of the hearing. He does so and advises that a period of three to four weeks would be more than sufficient. The alternative is that our client will prepare written submissions within the same period." 10 At 5.00 pm on that day Mr Simon Rubinstein, a Delegate of the Commission, telephoned Mr McHenry's office and advised that the adjournment would be granted. He spoke to Mr McHenry's secretary. Mr Rubinstein asked whether the applicant would be prepared to proceed by way of an oral hearing or whether he would prefer to submit written submissions. The secretary indicated that, as Mr Jorgensen resided in Queensland, it was likely that he would prefer to proceed by way of written submissions rather than an oral hearing. Mr Rubinstein then agreed that the matter would be adjourned to 11 May 1998 and that it would proceed by way of written submissions, rather than an oral hearing. Later that day Mr McHenry sent a fax to the Commission referring to the conversation between Mr Rubinstein and his secretary and confirming "your agreement that written submissions are to be provided by 11 May 1998". On 11 May 1998 Mr McHenry sent a fax to the Commission advising that the final draft submissions had been remitted to his client for final comment. The submissions were received by the Commission on 13 May 1998. At the outset they stated: "THIS IS A PRELIMINARY SUBMISSION. Further submissions will be made once adequate particulars have been given of the areas of concern listed in the Notice. It is Mr Jorgensen's intention to refer to and rely upon the matters herein raised in his subsequent submission at a hearing of the Show Cause Notice to be convened at a date and time convenient to the parties." 11 On receipt of this submission Mr Rubinstein telephoned Mr McHenry on 23 June 1998. Mr Rubinstein said the Commission had made available to the applicant all material upon which it based its decision and given him an opportunity to respond and put evidence. Mr Rubinstein pointed out that the applicant had originally sought an oral hearing but had then chosen to proceed by way of written submissions. Mr Rubinstein said he would allow Mr McHenry a further seven days for the applicant to make further submissions and supply further documentation. On 30 June 1998 Mr Rubinstein wrote to Mr McHenry confirming the matters raised in the telephone discussion of 23 June 1998 and allowing until 8 July 1998 for Mr Jorgensen to make further submissions. On 2 July 1998 Mr McHenry sent a fax to the Commission asserting that at all times the applicant had made it clear "that his preference was that a hearing be conducted". On 8 July 1998 Mr McHenry forwarded further submissions to the Commission. The submissions included a statement that the applicant "notes that there is to be no hearing". 12 About this time Mr Rubinstein left the employ of the Commission and the matter was handed to another Delegate who decided that the applicant should be given an opportunity to appear at an oral hearing. On 7 September 1998 the Commission wrote to Mr McHenry advising that should his client wish to avail himself of a hearing he should advise the office and that, if a hearing was sought, a date of 15 October 1998 had been "tentatively scheduled". The letter pointed out that should any witness not be prepared to voluntarily attend, a summons could be issued by the Delegate. Mr McHenry replied by fax on 14 September 1998 referring to the letter of 7 September 1998 as follows: "We are surprised by its contents given the previous attitude of the Commission to the conduct of the hearing. Your letter of 30 June made it plain that a hearing would not be held given the past election of our client. ASIC has made its determination on the matter and Mr Jorgensen was forced to comply by delivery of further submissions. Why has ASIC now changed its mind and why does it feel able to reverse its decision without any adequate explanation? Mr Jorgensen has a great deal of scepticism about the bona fides of ASIC's offer. Mr Jorgensen is presently overseas on an indefinite basis. He is not able to alter his arrangements. ASIC made it clear that it would proceed to a determination upon receipt of further written submissions - it could not have been more definite that no "hearing" would be conducted. ASIC has received those submissions. Mr Jorgensen was compelled to deal with the Show Cause Notice in accordance with ASIC requirements. He is not now in a position to take the matter any further." 13 The Commission replied by fax on the same day advising that Mr Rubinstein had been unable to complete the matter and that it had been referred to a new Delegate. The new Delegate requested that the Commission provide Mr Jorgensen further opportunity to attend a hearing. The fax concluded: "The matter will now proceed on the basis of the written submissions your client has provided." As already mentioned the Delegate made a notice of prohibition on 10 November 1998 and it was served on 19 November 1998. 14 Counsel for the applicant argued that the "opportunity of being heard" referred to in s 600(3)(b) means literally an opportunity to be heard at an oral hearing. As I shall shortly explain, I do not agree with that submission. But in any event, on the facts of this case there is no doubt that the applicant did receive an opportunity of being heard at an oral hearing. He rejected that opportunity on two occasions, first through his solicitor's secretary on 20 April 1998 and then again in the letter of 14 September 1998. There was no obligation on the Commission to pursue the matter any further. 15 But in my opinion there was no legal obligation on the Commission in this case to afford an oral hearing. Section 57(1) of the Australian Securities and Investment Commission Act 1989 applies where a national scheme law (which the Corporations Law is) "requires the Commission to give a person an opportunity to appear at a hearing and to make submissions and give evidence to it". Subsequent sections of Pt 3 Div 6 go on to deal with summonsing witnesses and administering oaths or affirmations (s 58) and procedures at hearings (s 59). I do not think s 600(3)(b) of the Corporations Law answers the description of a law which requires the Commission "to give a person an opportunity to appear at a hearing". The provisions of s 600(3)(b) contrast with others in the Corporations Law which do obviously require an oral hearing. For example, s 837(1) provides that the Commission shall not make certain specified orders "unless the Commission complies with subsection (2) of this section". Section 837(2) provides: "The Commission shall give the applicant, the licensee or person, as the case may be, an opportunity: (a) to appear at a hearing before the Commission that takes place in private; and (b) to make submissions and give evidence to the Commission in relation to the matter." Plainly that contemplates an oral hearing. However s 600(3)(b) when it speaks of the opportunity of "being heard" is simply using the expression in a general administrative law sense. The rule audi alterem partem, literally "to hear the other side", need not necessarily mean an oral hearing: In Chen v Minister for Immigration (1994) 48 FCR 591 a Full Court of this Court (Black CJ, Lee and Heerey JJ) held that an applicant for refugee status seeking departmental review of a primary decision to refuse status was not necessarily entitled to an oral hearing. The Court said (at 597): "It is beyond argument that the rules of natural justice do not mandate in all cases an oral hearing for the person affected. This was recognised by the House of Lords in Local Government Board v Arlidge [1915] AC 120 at 133. There have been many developments of the law in this area since Arlidge but it remains clear that an oral hearing is not necessary in every case. Thus, in Heatley v Tasmanian Racing and Gaming Commission (1977) 137 CLR 487, where the High Court was concerned with a statutory power conferred on the respondent to warn off persons from racecourses, Aikin J said (at 516): 'Fairness requires that the person affected should, save in an emergency, be given notice by the Commission of its intention to issue a warning-off notice and of the grounds for that action and should be afforded an opportunity to make representations to the commission on his own behalf, which it must consider before taking action. A notice effective for an indefinite period should not be issued without compliance with at least those procedural requirements. I do not think that fairness requires in this context an oral hearing though in some circumstances the Commission may well find that it cannot resolve inconsistencies between its information and written submissions from the person concerned without such a hearing. It is however for the Commission itself to devise its own procedures in the light of its obligation to act fairly.' Stephen and Mason JJ agreed (at 494)." 16 Counsel for the Commission conceded that there might be circumstances when general principles of administrative law could require an oral hearing. I accept that that is so, although a relevant circumstance is the very fact that the statutory scheme has elected not to mandate an oral hearing as it has for example with s 837, cf Brettingham-Moore v St Leonards Municipality (1969) 121 CLR 509. Orders 17 The application will be dismissed with costs, including reserved costs.

I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.

Associate: Dated: 31 March 1999 Counsel for the Applicant: J Kaufman QC with R Hay

Counsel for the Respondent: P Rose QC with Peter Hiland