1. At the hearing Mr Hack of counsel appeared for the applicant and Mr Derrington of counsel appeared for the respondent. The documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 ("the T documents") were put before the Tribunal as evidence of the documents that were before the decision-maker. Further documents were tendered and marked as exhibits. Oral evidence was given by the applicant's managing director and its company secretary. The respondent led oral evidence from an officer of the Commission.
2. I make the following findings of fact:
   • (a) The applicant is a company which was incorporated on 15 October 1915.
   • (b) The Directors of the applicant are:

(d) The shareholders of Brims Nominees Pty Ltd are:

(e) From its incorporation the Applicant has engaged solely in the business of manufacturing and distributing plywood products and, since 1962, veneered particleboard products. It distributes those products throughout Australia and to the United States, Japan, Taiwan and other smaller export markets.

(f) The applicant manufactures and sells wood panel products, namely particleboard, veneered particleboard and plywood. The majority of the applicant's operations is devoted to the production and sale of veneered particleboard (approximately 75% in volume). The veneered particleboard market is highly competitive.

(g) The applicant controls three (3) related entitles;

• Brims Distributors (NSW) Pty Ltd;
• Brims Distributors (Vic) Pty Ltd; and
• Brims Distributors (Qld) Pty Ltd.

The applicant is the sole shareholder in Brims Distributors (NSW) Pty Ltd and Brims Distributors (Vic) Pty Ltd, and holds 75% of the issues share capital in Brims Distributors (Qld) Pty Ltd. The remaining shares in Brims Distributors (Qld) Pty Ltd are held by two (2) directors of the applicant (namely J M G Brims and D J Brims) although these shares are in the process of being sold to the applicant.

(h) Neither the applicant nor the related entities have borrowed funds from any bank or financial institution for the purposes of funding capital infrastructure or for any other purpose since 11 May 1927. Neither the applicant nor any of the related entities operates any form of overdraft or similar facility.

(i) The applicant and the related entities have strict operating policies that all trade creditors are paid on a 30 day account basis.

(j) The policies of no borrowing and paying creditors within 30 days are deliberate and intentional policies adopted over the years by the Directors, both past and present, and form part of the corporate ethos of the applicant.

(k) Since January 1990, the applicant has had the services of a fully qualified professional accountant, Mr James Moores FCPA. Mr Moores' tasks include not only the more usual tasks of an internal accountant such as the preparation of statutory accounts, but also involve preparation, on a monthly basis, of management accounts, setting out profit and loss accounts, balance sheets and cash flow statements for the applicant and each of the related entities.

(l) From the early 1950's, the annual accounts of the applicant have been audited. In particular the applicant's accounts for the year ended:

were audited. The accounts for the year ended 30 June 1995 were not audited.

(m) In the year ended 30 June 1995, the number of members of the applicant had been reduced from 23 to 8 following:

• (i) proceedings brought in the Supreme Court of Queensland by other members whose shares were acquired as a result of those proceedings; and
• (ii) the decision subsequent to those proceedings by yet other members to sell their shares.

The proceedings are reported (Re: D G Brims & Sons Pty Ltd (1995) 16 ACSR 559). The decision not to have the 1995 accounts audited was made in May 1995 with the consent of all members. In addition, it was made at a time when the applicant believed that the provisions of the First Corporate Law Simplification Bill 1995 would be substantially amended prior to being enacted into law.

(n) The applicant produces approximately 1% of all particleboard manufactured in Australia. The most dominant of the other particleboard manufacturers is CSR which produces more than 50% of all particleboard produced in Australia. All of the particleboard produced by the applicant is used to make veneered particleboard in its own factory. The applicant supplies 20% of all the veneered particleboard sold in the Australian market. Approximately 4% of the particleboard produced by the other manufacturers referred to in paragraph 15 is supplied to companies and firms which manufacture and supply veneered particleboard in competition with the applicant. These manufacturers supply the other 80% of the total Australian veneered particleboard market.

(o) The dominant particleboard manufacturers have the ability, through the prices they charge for the supply of particleboard to the manufacturers of veneered particleboard who compete with the applicant, to influence the price of veneered particleboard in the veneered particleboard market. The nature and capacity of the applicant's operations are known to others in the industry. Access to the applicant's accounts via public lodgment of those accounts, particular over an extended period, would enable other particleboard manufacturers to not only measure the vulnerability of the applicant to pride reductions but also measure the results of any such price reductions and their impact on the applicant's profitability on a year by year basis as explained in Exhibit A.

(p) The findings of fact by Byrne J in Re: D G Brims and Sons Pty Ltd (1995) 16 ASCR 559).

(q) The applicant's continuing viability is vulnerable to price cutting by others in the industry because of the applicant's limited size of operation and vertical integration which is unique in the industry.

(r) The applicant maintains confidentiality about its actual production and profit margins so as to protect the business from competitors' price discounting.

(s) Disclosure of the applicant's financial accounts would arm its competitors with information that would assist the applicant's competitors in any attack on the financial viability of the applicant.

(t) For the reasons set out in the evidence of Mr Niven who is a Chartered Accountant employed by the respondent I am satisfied that the financial accounts would not, without more, enable a competitor to determine the applicant's profit margins on its products.

(u) The financial accounts, together with additional industry information would allow a competitor to make reasonable estimates of profit contribution by the respective products (veneered chipboard and plywood) of the applicant.

1. The applicant submits that it should have the benefit of relief from the requirement to lodge financial statements under s 313(2).
2. In particular the applicant relies on sub-paragraph 313(11)(ii) and (iii) which relevantly provides, in effect, that the Commission shall not make an order unless the Commission "is of the opinion" (which I understand to mean reasonable satisfaction) that compliance with the requirement would:
   • (ii) be inappropriate to the circumstances of the company; or
   • (iii) impose unreasonable burdens on the company.
3. The applicant concedes that it does not have the benefit of the exceptions in s 317B(3) because the financial statements for the year ended 30 June 1995 were not subjected to an audit, but otherwise complied with the subsection.
4. The applicant submits that by having the 1996 and 1997 financial statements on the public record would be to create a real risk that the applicant's competitors would be able to estimate unit of product profitability with adverse consequences for the applicant.
5. The respondent made submissions based on its policy as set out in Policy Statement 43 (T15). In relation to sub-paragraph 313(11)(a)(ii) the guideline states that the "inappropriate to the circumstances" test will normally only be satisfied in cases where there is an anomaly in the Corporations Law or there are consequences not intended by the legislature (Re: Mazda Australia Pty Ltd v Australian Securities Commission [1992] HCA 28; (1992) 29 ALD 57).
6. In relation to sub-paragraph 313(11)(a)(iii) the respondent again relies on its guidelines which in turn also rely on the Tribunal's decision in Re Mazda. It says that a burden will be unreasonable only where the balance is "so far against the interests of the applicants as to be fairly described as overwhelming". That seems to go beyond what the Tribunal said in Re Mazda at 29 ALD 57-8 where it said:

"An unreasonable burden, in the context of this legislation, must be considered to be such a burden that goes beyond what is based on reason or good sense, or goes beyond what is equitable or is excessive".

1. The respondent also submits that it is a specialist regulatory body which has expertise and experience in the regulation of companies and is especially well placed to determine, as a matter of discretion, the appropriateness of relief in relation to compliance with the Corporations Law. It submits that the Tribunal "would (as would the Federal Court) give particular weight to the decision" of the respondent. That proposition is supported by citing the judgment of Gobbo J in TNT Ltd v NSC (1986) 11 ACLR 59 at 61-2 where his Honour said:

"On this appeal, the Commission altered its approach and submitted that there was no power under s 58 to make the type of order sought. Its first submission was that though s 537 of the Companies Code applied to enable this court to hear this appeal and though the appeal was conceded to be by way of a de novo hearing, the court should not depart from the Commission's decision unless it was convinced that the Commission had fallen into serious error.

I am of the view that this is altogether too wide a proposition and would require the court to abdicate its obligation to conduct a de novo hearing. Rather, it may be more moderately put that the court should include due consideration of the Commission's decision in its deliberations on the matter of discretion. What weight is to be given to the Commission's decision will depend, amongst other things, on whether the decision is accompanied by reasons and, where relevant, material in support of such reasons and whether the subject matter is an area where the Commission's expertise might be thought to have particular relevance. Less weight is likely to be given to the Commission's views where it is essentially offering a view on the interpretation of a statute.

1. It will be apparent that his Honour was dealing with a judicial review of the Commission's decision albeit that it was a do novo hearing. Given that this Tribunal "stands in the shoes of the Commission" (s 43 Administrative Appeals Tribunal 1975) so as to exercise the powers and functions of the Commission for the purpose of reviewing the decision under review I am not satisfied that the applicant must establish that the Commission fell into serious error. The Tribunal's obligation is to make the correct or preferable decision after an objective assessment of the material before the Tribunal. In doing so it may take into account the Commission's published policy guidelines but must ultimately make its decision according to law.
2. In this regard the respondent submits that the material before the Tribunal does not disclose that the lodgment requirements impose an unreasonable burden on the applicant.
3. The respondent also submits, based on the 1996 accounts (T14), that the accounts do not provide sufficient information to allow a detailed analysis of profit per unit of output. Nor it says can this information be ascertained when published industry information is taken into account.
4. In relation to future years (financial year ended 30 June 1998 and following) the respondent concedes that the applicant will not be required to lodge its accounts under the present provisions of the Corporations Law because of a restructure of the group.
5. The respondent also submits that the Tribunal is confined to considering the same matters considered by it. It follows says the respondent that the Tribunal cannot consider relief on grounds of inappropriateness to the circumstances of the company in s 313(11)(a)(ii) because the Commission was not asked to consider relief on that basis.
6. That raises an issue as to what is the nature of the decision under review. In some cases the characterisation of the decision under review may well raise difficulties and some of these difficulties were discussed by Davies J in Freeman v DSS [1988] FCA 294; (1988) 87 ALR 506. In Hospital Benefit Fund of Western Australia Inc v Minister for Health, Housing and Community Services [1992] FCA 599; (1992) 111 ALR 1 the Full Court cited Freeman with approval. At page 11 the Court said:

"It is, of course, well established that the Tribunal determines what was the correct or preferable decision having regard to the whole of the evidence placed before it. It is not confined to the evidence which was before the primary decision-maker. The tribunal is, however, obliged to address the same question as was before the primary decision-maker. This distinction was spelled out by Davies J in Freeman v Secretary, Department of Social Security [1988] FCA 294; (1988) 19 FCR 342; 87 ALR 506.

1. I am satisfied that the application of 9 February 1998 (T7 at folios 31 to 50) by the applicant must be characterised as an application for relief from the requirement to lodge accounts and for relief from audit requirements. The audit issue is no longer in issue because relief was granted by the Commission. The application set out extensive material to support relief from lodgment of accounts on grounds of "Unreasonable Burden and Competitive Disadvantage". Subsection 313(11) was specifically referred to in the application. In my view subparagraph 313(11)(a)(ii) was fairly raised by the application. The fact that the Commission did not consider the application under that sub-paragraph does not, in my view, thereby prevent this Tribunal from considering the application of the sub-paragraph. Rather, it emphasises that the jurisdiction of this Tribunal is to review the decision under review and not the reasons for decision and that the review is by way of hearing de novo.
2. The issue for review is whether the applicant should be granted relief from lodgment of accounts in accordance with s 313 of the Corporations Law.
3. There is no dispute that the applicant is a company within the terms of s 45A(3) of the Corporations Law and is therefore a large proprietary company.
4. Section 317B of the Corporations Law has the effect of requiring the applicant to, inter alia, lodge a copy of the company's financial statements for the year ended 30 July 1997.
5. Section 313 of the Corporations Law provides for relief from requirements to lodge financial statements within the terms of the section. Subsection (11) of the section provides, in effect, that relief shall not be granted unless the Commission is of the opinion that compliance with the requirement would, inter alia, be inappropriate to the circumstances of the company or would impose unreasonable burdens on the company.
6. The applicant is not a borrower in the public domain although I am satisfied it does have trade creditors notwithstanding that I am also satisfied that it pays those creditors on a timely basis in accordance with the terms of trade. The applicant's shares are held by six persons in their own right and by shareholdings in Brims Nominees Pty Ltd. Four of those shareholders are the directors of the applicant - the other two shareholders are the wife and daughter of the managing director.
7. I am satisfied, on the material before me, that disclosure of the financial statements for the year ended 30 June 1997 by lodgment with the Commission could provide the applicant's competitors with commercial information about the applicant so as to unfairly prejudice the applicant in a competitive industry.
8. Because of the restructure of the company lodgment of financial statements will not be required for the financial year ended 30 June 1998 et seq.
9. On the material before me and for the above reasons I am of the opinion that compliance with the requirement to lodge accounts in accordance with s 317B of the Corporations Law would be inappropriate to the circumstances of the company. Such compliance would be inappropriate because the public interest in the lodgment of accounts is outweighed in this case by the potential for the company to be subjected to price competition from major competitors with the inherent potential to make the company no longer financially viable.
10. The decision under review will be set aside and in lieu thereof there will be an order reliving the applicant from compliance with the requirement to lodge accounts for the financial year ended 30 June 1997.

I certify that the 28 preceding paragraphs are a true copy of the reasons for the decision herein of Mr K L Beddoe (Senior Member)

Solicitor for the Respondent Australian Securities and Investments