(b) imposing primary responsibility for protecting the interests of policyholders on the directors and senior management of general insurers; … '
19 It is submitted that, construed as it has been by APRA, s 25A would not be a law with respect to insurance. Thus, it is necessary to read the section in a manner which would not exceed the legislative power of the Commonwealth (s 15A Acts Interpretation Act 1901 (Cth)) by limiting its operation to those in a s 24 position. It is submitted that the language of s 25A(5) is consistent with the construction of the provision advanced by the applicant as it is framed upon the assumption that a qualified person is actually in one or other of the three alternative situations at the time of the disqualification.
20 Counsel for APRA pointed to the very wide and unequivocal terms of s 25 and indicated that many persons would be disqualified, and sensibly disqualified, although they had never had anything to do with insurance. It is submitted that too much was being made of s 25A(5) on behalf of the applicant and that s 25A(5)(a) would only be activated 'if' the person is or is acting in a relevant position. It is submitted that whatever limitations, constitutional or otherwise, there may be in relation to s 25A, in the present case there was an adequate nexus as the conduct relied upon took place whilst the applicant was acting in a s 24 position as senior manager of a general insurer.
21 In my opinion, it is not possible to read down s 25A to apply only to those who are presently in a s 24 position. No such limitation appears in s 25 and the language of s 25A is to be contrasted with the explicit terms of s 27. Section 25A(5) does, at first sight, give support to the argument for the applicant but, in my view, the explanation of it by counsel for APRA is correct. Any abuse of s 25A can be checked, either by administrative law proceedings or exercise of the right to review provided by the statute. The general object of the Act is of no assistance to the applicant on this point.
22 I should add that I have consulted the Explanatory Memorandum and Second Reading Speech in relation to the introduction of s 25A in 2002. The stated purpose was to bring the Act into line with Superannuation Industry (Supervision) Act 1993 (Cth), also administered by APRA, presumably a reference to s 120A(3) of that Act. The terms of that section give some modest support to the submission on behalf of APRA in the present case.
23 The second issue was put in various ways during the course of argument but can be summarised for present purposes as a contention that the discretionary decision to disqualify was influenced by punishment and deterrence, neither of which was a legitimate consideration pursuant to the Act. It is contended for the respondent that neither of those considerations did affect the decision but that, even if deterrence were taken into account, it would not be an irrelevant consideration.
24 There is no express reference to punishment or deterrence in the reasons. Indeed, the powers are described as 'protective'. I am not satisfied that punishment as such can be said to have been an operative consideration. Punitive effects are to be distinguished from a punitive purpose. However, I am satisfied that par 140 of the reasons reflects an intention that disqualification would have a wider impact than simply preventing the person disqualified from being or acting in the positions referred to in s 24(1). That more limited purpose is dealt with as, in effect, a separate topic in par 141. It seems to me that, when understood in context, the language of par 140 is consistent only with the power being exercised in order to make an example of the party disqualified to others acting in s 24 positions. The question is whether that purpose is permitted by the statute. Attributing a label such as deterrence or punishment may illuminate but will not answer that question.
25 Uninstructed by authority, I would consider that the power of disqualification in question here is entirely protective, being designed to protect the public by preventing persons from being involved in the management of general insurers who are not suitable to fulfil that role. Counsel have referred to authority in relation to other statutes.
26 Counsel for the applicant referred to the following passage in Tuncok v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 172 (at [42]):
'It may be that if the sole, or a substantial, factor justifying cancellation of a visa were the deterrence of others from committing a crime, the purpose of the decision may be punitive, which might be an irrelevant consideration (see Re Sergi and The Minister for Immigration and Ethnic Affairs (1979) 2 ALD 224 at 231 and Gungor and The Minister (1980) 3 ALD 225 at 227 and 232).'
27 However, the Court then went on to say (at [44]):
'It cannot be said that to have regard to the beneficial consequences for Australia flowing from the exercise of the discretion to cancel the visa is to have regard to a consideration foreign to the purpose for which the discretion is granted. But for the grant of a visa, the appellant would have no right to remain in Australia. The exercise of the discretion was not directed to the punishment of the appellant. The possible consequence of deterring other non-citizens from committing similar offences was not an irrelevant consideration in the exercise of the discretion conferred on the Minister by s 501(2) to decide whether the appellant should be permitted to remain in Australia (see generally Djalic v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 151 at [75]-[77]).'
28 The decision in Djalic v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 151; (2004) 206 ALR 488 is a reasoned consideration of s 501 of the Migration Act 1958 (Cth) and should be regarded as authoritative compared with the earlier Administrative Appeals Tribunal decisions referred to in Tuncok. However, the context of s 501 is, in my opinion, too far removed from the present circumstances to be of any real value in this case.
29 The authorities in relation to professional disbarment are closer to home and point in the other direction, as the purpose of that power is described as 'entirely protective' (see Health Care Complaints Commission v Litchfield (1997) 41 NSWLR 630 per Gleeson CJ, Meagher JA and Handley JA at 637F-638B citing Clyne v New South Wales Bar Association (1960) 104 CLR 186 at 201-202 and New South Wales Bar Association v Evatt (1968) 117 CLR 177 at 183-184).
30 The cases concerning disqualification of directors and officers of corporations were recently reviewed (for a different purpose) by the High Court in Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 78 ALJR 1354; (2004) 209 ALR 271. Although not directly relevant to the precise point of that decision, the review by McHugh J of the practice as to the manner in which the corporations law disqualification provisions have been applied in recent times demonstrates that general deterrence is now taken into account.
31 It is of interest to note that the early cases described s 122 of the Companies Act 1961 (NSW) (that created an offence of certain disqualified persons acting as a director or promoter or taking part in the management of a company if that took place without the leave of the Court) as protective. Bowen CJ in Eq in Re Magna Alloys & Research Pty Ltd (1975) 1 ACLR 203 said as follows (at 205):
'The policy to which s. 122 gives effect is that a person convicted of an offence of any of the types specified in that section is not to be permitted to act as a director or to take part in the management of a company. The section is not punitive. It is designed to protect the public and to prevent the corporate structure from being used to the financial detriment of investors, shareholders, creditors and persons dealing with the company. In its operation it is calculated to act as a safeguard against the corporate structure being used by individuals in a manner which is contrary to proper commercial standards.'
The provision had earlier been described by Street J as 'entirely protective' (Re Ferrari Furniture Co Pty Ltd [1972] 2 NSWLR 790 at 791 applying Re Altim Pty Ltd [1968] 2 NSWR 762 at 764).