Commercial Agents and Private Inquiry Agents Act 2004
Evidence Act 1995
Registered Clubs Act 1976.
Cases Cited: Austin v Commissioner of Fair Trading and Commissioner of Police [2016] NSWCATAP 179
Source
Original judgment source is linked above.
Catchwords
Civil and Administrative Tribunal Act 2013Commercial Agents and Private Inquiry Agents Act 2004Evidence Act 1995Registered Clubs Act 1976.
Cases Cited: Austin v Commissioner of Fair Trading and Commissioner of Police [2016] NSWCATAP 179Australian Broadcasting Tribunal v Bond [1990] HCA 33, (1990) 170 CLR 321Blisset v Commissioner of Police, New South Wales Police Service [2006] NSWADT 114Briginshaw v Briginshaw (1938) 60 CLR 316Bronze Wing International Pty Limited v SafeWork New South Wales [2017] NSWCA 42Comalco Aluminium (Bell Bay) Ltd v O'Connor (1995) 131 ALR 657Commissioner of Police v Toleafoa [1999] NSWADTAP 9Constantin v Commissioner of Police, New South Wales Police Force (GD) [2013] NSWADTAP 16Director of Public Prosecutions v Smith [1991] Vic Rep, [1991] 1 VR 63Health Care Complaints Commission v Do [2014] NSWCA 307Hughes and Vale Pty Ltd v New South Wales (No. 2) [1955] HCA 28, (1955) 93 CLR 128Kirbach v Health Care Complaints Commission (No. 2) [2015] NSWCATAD 234McBride v Walton (C of A, 15 July 1994, unreported)McDonald v Director-General, Social Security [1984] FCA 57, (1984) 1 FCR 354
Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30
Naziry v Director-General, Ministry of Transport [2004] NSWADT 40
O'Sullivan v Farrar [1989] HCA 61, (1989) 168 CLR 210
Re Lenehan [1948] HCA 45, (1948) 77 CLR 403
Re Queensland Electricity Commission
ex parte Electrical Trades Union of Australia (1987) 72 ALR 1
Smith v Commissioner of Police, New South Wales Police Force [2014] NSWCATAD 184
Sobey v Commercial and Private Agents' Board (1979) 22 SASR 70
On 11 July 2017 the applicant Robert William Reilly applied to this tribunal for review of a decision by the respondent Commissioner through the Security Licensing and Enforcement Directorate (SLED) of the New South Wales Police Force refusing his application for the grant of a licence (known as a CAPI licence) under the Commercial Agents and Private Inquiry Agents Act 1996 (CAPI Act). The decision-maker was of the view that the applicant is not "fit and proper" to hold the class of licence sought and that the grant of the licence would be contrary to the public interest.
The respondent Commissioner found that the applicant had, between 2009 and 2012, engaged in dishonest conduct and business practices in connection with his roles at Brycorp Investigation Services Pty Ltd, Brike Investigations (Aust) Pty Ltd and the Manly-Warringah Rugby Leagues Club Ltd of Brookvale, New South Wales. The club had been in operation since 1957 as a social and sporting club assisting in the promotion, conduct and propagation of rugby league football in the Manly-Warringah district.
The Commissioner's decision rested to a substantial extent on the findings and decision resulting from an investigation undertaken by the Independent Liquor and Gaming Authority (ILGA) into the Manly-Warringah Rugby League Club Ltd, liquor licence No. LIQC30228452. The investigation followed a complaint to ILGA by Mr Anthony Keon, director, Compliance and Enforcement Division, Office of Liquor, Gaming and Racing (OLGR, an authority separate from the police force), in relation to the club.
ILGA produced a lengthy decision (exhibit R1, pp 364-502) dated 9 November 2015 containing numerous findings of fact and, among other orders, declaring the applicant to be ineligible to stand for election to, or be appointed to, or hold office in, the positions of both secretary or member of the governing body of the club or any other registered club in New South Wales for a period of three years from the date of the decision. That period of disqualification represented the maximum that could be imposed under part 6A of the Registered Clubs Act 1976 and, given the date of the order, it must still be in force.
[3]
Applicable legislation and issues
Under s 11 of the CAPI Act, it is an offence to carry on any commercial agent activity or private inquiry agent activity unless the person has an operator licence for that activity, and in the course of his or her employment with the holder of a master license for that activity. Section 4 defines "Commercial agent activities" as debt collection, process serving or repossession of goods, and "Private inquiry agent activities" as the investigation of persons or the surveillance of persons.
Pursuant to s 12, the Commissioner of Police may grant licences for those purposes. An application for an operator licence must, in accordance with s13, be refused if the applicant is "a disqualified individual", meaning inter alia "an individual who, in the opinion of the Commissioner, is not a fit and proper person to hold a licence" (s 4). The Commissioner also has a discretion to refuse an operator licence if, inter alia, "the Commissioner is of the opinion that the grant of the licence would be contrary to the public interest" (s 13(2)(b)).
In this case the Commissioner's position is that the applicant is not "a fit and proper person to hold a licence" and that the grant of the licence would be contrary to the public interest. The issue is therefore whether or not either or both of those propositions is or are established. There are a number of sub- issues, however:
While the applicant does not seek to reagitate ILGA's findings (subject to a dispute regarding a conflict between the evidence of a Brycorp employee, Ms Julie Petersen, and a former accounting assistant to Brycorp and Mr Reilly, Ms Katie Smallwood, to which I will return later), the parties are in contest as regards the degree of seriousness of the conduct found and the extent to which, if at all, it involved dishonesty.
The extent to which reform and rehabilitation are required and have been established.
The relevance of the applicant's past conduct on the question of honesty.
[4]
The evidence
Neither party adduced any oral evidence but relied on the s 58 documents (which included the ILGA decision) and other documentary material. The respondent's evidence was all contained in the s 58 documents (exhibit R1).
The applicant tendered his affidavit dated 4 August 2017 (exhibit A1) in which he stated inter alia that he had first held a commercial and private inquiry agent licence when he was 19 years old and held his licence, until it was cancelled, for over 30 years, having first been licensed in 1980. Between 1988 and 1992 he worked for the Department of Corrective Services, being promoted to the plainclothes section of the Internal Investigation Unit, an anti-corruption section.
No complaints had ever been made against him in the 30 or more years he had worked as a CAPI agent, nor had he ever been convicted of, or charged with, a criminal offence.
After working for and with other commercial agents, he formed his own company, Brycorp Investigations Pty Ltd, on 15 May 2007. He used his CAPI licences in the work he did for the company, mainly for banks and corporations. He had never collected personal debts. He had always been engaged by the most respected clients, including Northern Beaches Credit Union, Capital Finance, Westpac, Lloyds of London, Langies Lawyers and the Bank of Scotland.
In the course of operating the business, Mr Reilly and Brycorp had four bank accounts, but used only two of them, one with the Police Credit Union (PCU) and one with the Northern Beaches Credit Union (NBCU). He would often be required to pay overhead expenses before the company received payments from clients. "In those instances, I would personally lend the company money from my own funds in the PCU account by writing a cheque to the NBCU account. Once there were sufficient funds in the NBCU account, I would draw a cheque from that account and deposit it in the PCU account. Other times, I would cash cheques, usually about $400 at a time, at the Manly Warringah Rugby Leagues Club to pay overheads and expenses for my Brycorp business".
The applicant stated that he understood that "my payment practices at the time were antiquated, cumbersome and inefficient. At the time they were permitted by the credit unions. I used my cheque-books to keep records. My accounting and banking practices were not dishonest".
[5]
The applicant's references
A number of unusually weighty references were attached to the initial application to the tribunal. One, dated 22 June 2016, was from Thomas Keneally AO, one of Australia's leading authors, who enjoys international renown. Mr Keneally stated that he has been a friend of the applicant's for 20 years, mainly through his involvement with Manly Warringah Rugby League Football Club, for whom he did the most continuous and unstinting service over many years, and also in his career as a board member and chairman of the licensed leagues club.
From those who worked with him, the referee knew that his performance and reputation in private investigation, as well as in Corrective Services, was impeccable. Mr Keneally said he was also a witness to the applicant's involvement in Northern Beaches Labor Party politics, in which again his work was unstinting and professional.
The club had languished since he departed from the chairmanship. "I have had too many interactions with him and too many demonstrations of his character to believe the flawed and well-publicised accusations by detractors that were thrown his way in the matter of the leagues club. I believe he always strove to do what was legal and valid and his right as chairman". Mr Keneally said he was aware of the complaints to ILGA and that the authority had found against him. He believed that was due to inexperience and a need for greater attention to detail, but could see nothing of a corrupt, self-serving or dishonest nature. The applicant had learned a bitter lesson from the experience and there would be no repeats.
He would consider it tragic if an honest and highly competent man, a good volunteer citizen as well, were to lose his licence. If it were not for the internecine conflict that occurred at Manly, he did not believe those issues would ever have been brought to the attention of the authorities. He was not looking at the matter through rose-coloured glasses as he had spoken to many of the key people involved.
Another detailed reference was from the Hon. Kerry Sibraa AO, a former president of the Senate, and Mrs Julie Sibraa, who said they had known Mr Reilly for over 30 years as a kind, thoughtful and loyal person. He had been passionate in his support for the things he believes in, including the Manly-Warringah Sea Eagles. He gave hundreds of hours of time as elected chairman of the Manly-Warringah Rugby League Football Club, deputy chairman of the Manly-Warringah Sea Eagles and chairman of the leagues club. He had an intense level of involvement during a tumultuous time within the Sea Eagles group, which meant he attracted criticism from his opponents. They had both observed a campaign to discredit and smear his character and integrity, commenced in a singularly relentless and public way. They would willingly go on record to describe those attacks as unjustified and entirely disproportionate, given the tireless effort Mr Reilly gave to the Manly clubs.
[6]
Applicant's submissions
The applicant lodged detailed written submissions dated 7 August 2017 in which he argued inter alia that in order to understand why he is a fit and proper person and that it is that in the public interest that he should hold a licence, it was necessary properly to understand the ILGA findings and to review critically the respondent's reasons at this hearing as to why he should be refused a licence.
In McBride v Walton (Court of Appeal, 15 July 1994, unreported), the Court of Appeal had stated that where there is evidence of misconduct, there should be consideration of any explanation for that misconduct, its seriousness to the particular activity, the motivation of the person, whether the misconduct is an isolated incident, the person's underlying qualities of character and the person's conduct since the incident, and whether that demonstrates recognition of the misconduct and subsequent reform. The question might be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur.
The submissions then outline the leading authorities and principles relating to "fit and proper person", noting that they were summarized in Austin v Commissioner of Fair Trading and Commissioner of Police [2016] NSWCATAP 179, [58].
The submissions then refer to ILGA complaint 1.1.1 alleging payment to the applicant of cash advantages exceeding $400 on 98 separate occasions between June 2009 and March 2012 into the personal account of Mr Reilly. The total of the funds so advanced by the club was $448,600. Each transaction was approved by Peter Spray, the club secretary, and recorded in the club's cash disbursements journal. The journal was then presented at the following monthly meeting of the club's governing body for retrospective approval. ILGA found those particulars established. Complaint 2.1.1 alleged that each of the 98 cash advances was a loan, made at a time when the applicant was a member of the club's governing body and when the club's cash flow was "tight", and constituted a breach of s 41N of the Registered Clubs Act 1976, which prohibits a club from lending money to a member of the club's governing body. ILGA found that complaint established, and also a related complaint (4.1.1) relating to providing cheques to the club for amounts exceeding $400, in contravention of cl 29(1)(b) of the Gaming Machines Regulation 2010. It did not, however, accept that the challenging cash flow position of the club was sufficient ground in itself for finding the applicant not to be a fit and proper person.
[7]
Consideration
A decision to refuse an operator licence is made under part 2 of the CAPI Act. A decision under that part may be reviewed by this tribunal: s 20. The decision falls within the administrative review jurisdiction of this tribunal: Administrative Decisions Review Act 1997 (ADR Act), s 9.
In such proceedings there is no onus of proof on either party and the standards of proof in Briginshaw v Briginshaw (1938) 60 CLR 316 and the Evidence Act 1995 do not apply: Bronze Wing International Pty Ltd v SafeWork New South Wales [2017] NSWCA 42, [89] - [91], [127]; Sterjovski v Director-General, Department of Transport [2002] NSWADT 10, [10] - [12]. These are not adversarial proceedings, but a process of merits review in which the applicant does not assume the responsibility of having to prove a case, nor does he or she cause an administrator to have to prove a case. The tribunal reaches its own conclusion as to the correct and preferable decision and "there is no presumption that the decision of the administrator is correct": McDonald v Director-General of Social Security [1984] FCA 57; (1984) 1 FCR 354, 357.
The considerations relevant to the tribunal's task are to be identified primarily by reference to the Act: Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30, [73]. The tribunal's role is to determine whether, having regard to the underlying facts in the matter and the applicable law, the decision of the Commissioner is the correct and preferable one: ADR Act, s 63.
[8]
"Fit and proper person"
Under s 13 of the CAPI Act, an application for an operator licence must be refused if the applicant is "a disqualified individual". That phrase is defined in s3 as including "(d) an individual who, in the opinion of the Commissioner, is not a fit and proper person to hold a licence". The High Court has defined fitness and propriety as incorporating three components: "honesty, knowledge and ability": Hughes and Vale Pty Ltd v New South Wales (No. 2) [1955] HCA 28; (1955) 93 CLR 128, 156.
In Sobey v Commercial and Private Agents Board (1979) 22 SASR 70, 76, a case dealing specifically with a commercial agent, Walters J said in a much-quoted passage:
In my opinion what is meant by ['fit and proper'] is that the applicant must show not only that he is possessed of the requisite knowledge of the duties and responsibilities evolving upon him as the holder of a particular licence but also that he is possessed of sufficient moral integrity and rectitude of character as to permit him to be safely accredited to the public… as a person to be entrusted with the sort of work which the licence entails.
The phrase was also discussed by Mason CJ in Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321, [63], where his Honour said that "The question whether a person is fit and proper is one of value judgment. In that process the seriousness or otherwise of particular conduct is a matter for evaluation by the decision-maker. So too is the weight, if any, to be given to matters favouring the person whose fitness and propriety are under consideration".
As the High Court explained in Yusuf, the considerations relevant to the tribunal's task of applying the fitness and propriety test are to be sought in the Act itself. The tribunal will therefore have regard to the objects of the Act as set out in s 3:
3 Objects
The objects of this Act are:
(a) to protect the public in relation to commercial agent and private inquiry agent activities (that is, process serving, debt collection, repossession of goods, surveillance of persons and investigation of persons), and
(b) to provide for the licensing of persons carrying out, and persons carrying on business in relation to, commercial agent and private inquiry agent activities, and
(c) to establish standards to be observed by licensees in relation to commercial agent and private inquiry agent activities, and
(d) to ensure that licensees are accountable for their acts and omissions in relation to commercial agent and private inquiry agent activities.
[9]
Obligations in respect of trust money and trust accounts
Schedule 2 of the CAPI Act requires that any money received by a master licensee on behalf of any person in connection with the licensee's business is to be deposited in a trust account and must not be used to pay the licensee's debts. Among other stipulations are requirements for trust accounts records to be audited within three months after the end of an audit period. The applicant denies that he held money on trust and provided nil returns to the Commissioner in respect of holding money on trust. He states that an account he operated named "Trust" was misnamed and in retrospect was more in the nature of a miscellaneous expenditure account. In a letter to SLED dated 20 May 2015, he stated that if any moneys were collected on a client's behalf, they would be directly deposited into that client's account (exhibit R1, pp 54, 57, 100).
The evidence on the question of whether the applicant conducted a trust account is conflicting. As was noted above, Ms Smallwood stated that when she began her employment with the applicant in 2013, Julie Petersen, who had been in in his employ as his secretary since 2007, told her that while the company did not operate a trust account properly so called (though it did have an account named "Trust"), it had previously deposited money received from debtors into the applicant's bank account and would return it to the bank, credit union or other client. In her statutory declaration of 28 June 2016, Ms Petersen denied saying anything to that effect and stated that the practice was to deposit any money collected from debtors directly into the client's nominated account.
The respondent submitted that the tribunal should accept Ms Smallwood's version of events in preference to that of Ms Petersen, given the latter's criminal convictions and the fact that the former had no observable incentive for making a false statement. It may also be relevant that Ms Smallwood is a chartered accountant holding a Bachelor of Business Administration with Bachelor of Commerce-Accounting degrees. As such she might be expected to have a keener eye for accounting detail than Ms Petersen, whose background was secretarial and administrative, although it did involve some bookkeeping functions.
Specifically, Ms Smallwood related that when she enquired why there was no trust account, Ms Petersen said "We do it in a different way now, so it was no longer needed to be done in the old way". Ms Smallwood added "She didn't elaborate what she meant but I understood this to mean that they did not take cash from people on behalf of Banks, Credit Unions and or other entities as they had previously. I believe this was because they did not have a "Trust" account as is required in order to collect money on a client's behalf".
[10]
Cash advances and monetary advantages
The applicant does not dispute ILGA's findings on this point. It found that on 98 separate occasions between June 2009 and March 2012, the club deposited cash amounts, all exceeding $400, to the applicant's personal bank account. The applicant then transferred those funds on the same day to another account, usually an account for Brycorp. For each of these transfers, the applicant provided the club with a cheque for the amount that had been advanced to him by the club. Those cheques were usually drawn against the account of Brycorp, but some were drawn against Brike Investigations and some on his personal account. The club retained those cheques, usually for up to about three days, but on some occasions for longer periods, before actually depositing them in its bank account.
The total of the funds advanced by the club in those 98 transactions was $448,600. Each transaction was actually approved by the club secretary, Mr Peter Spray, and recorded in the club's cash disbursements journal. That Journal was presented to the governing body at the succeeding monthly meeting for retrospective approval ([612] - [618], [621], [623]). ILGA found that each of the 98 cash advances constituted a loan in breach of s 41N(1) of the Registered Clubs Act 1976 (RC Act), which prohibits the club from lending money to a member of the governing body ([673] - (674]).
ILGA also found that the advances constituted a breach of the requirements of s 10 of the RC Act in that benefits and advantages were made available to the applicant that were not offered equally to every full member of the club (exhibit R1, pp 366, 369). The applicant maintained that the transactions were conducted with full transparency and with no trace of subterfuge. They were brought to the attention of the club board after having been approved by the secretary, Mr Spray. None of his cheques was ever dishonoured. The facility was for him a "convenience", but not one that provided him with "a material advantage" or "impugned his honesty". (ILGA report, paras [259] - [262].
That is not quite correct, however. He was using this arrangement to obtain a line of credit that might not otherwise have been available to his company. Further, it was not a case of one or two isolated instances, but a course of conduct involving 98 separate transactions over several years and a total of $448,600. He conceded that his payment practices were "antiquated, cumbersome and inefficient", but denied that any dishonesty was involved. Registered clubs, however, as Mr Hearnden contended, are community organizations and their funds can be regarded as in part community funds. The applicant was dealing with those funds to his own advantage at a financially and organizationally challenging time for the club (ILGA report, [311] - [314], [330]) and in a manner that was not available to other club members. I find that these transactions do reflect adversely on the applicant's honesty and support the conclusion that he is not a fit and proper person to hold a CAPI licence.
[11]
Expense claims
Complaint 1.1.2 alleged the payment of expense claims without assessment or approval that were not for the benefit of the club or approved by its members at a general meeting or otherwise permitted by s 10(6) of the RC Act. Between 2009 and 2012, the club paid the applicant's expense claims totalling $16,828.61 (ILGA report, para [624]). They were not approved, as required, by resolutions passed at the annual general meetings permitting the approval of expenses for the "professional development" of board members as they were not individually assessed or approved by the board.
In fact the majority of the expenses claimed, particularly Cabcharge vouchers, were not for the applicant's "professional development". An exception was the Leagues Club of Australia Annual Conference held at the Gold Coast in November 2009 (at [625] - [635]). While creative interpretations of expense account rules, though unacceptable, are far from unknown, the use of the greater part of $16,828.61 for purposes other than those for which the expenditure was authorised is an egregious dereliction that reflects adversely on the applicant's honesty. I find that it supports the conclusion that the applicant is not a fit and proper person to hold a CAPI licence.
[12]
Employment of a disqualified individual
The respondent relies on s 24 of the CAPI Act, which makes it an offence for the holder of a master license to employ a person who is a disqualified individual in any capacity in the business carried on by the licensee under the licence. A "disqualified person" is defined by s 4 to include "an individual who has been convicted or found guilty of a major offence", which means an offence involving, inter alia, dishonesty, being an offence punishable by imprisonment.
Julie Petersen was employed by the company from at least 2007 to 28 June 2016. She had been convicted on 10 April 2001 on 30 counts of obtaining money by deception (exhibit R1, pp 651 - 652). Nevertheless the applicant continued to employ her, notwithstanding his claim (which she did not deny in his statutory declaration) that she had stolen a considerable sum of money from him.
As was noted above, however, it is far from clear that the applicant held a master license. The applicant's solicitors argued that he did not. The evidence indicates (or may indicate) that Mr Reilly held an operator licence and an owner operator licence, not a master license. The respondent did not challenge that point or offer any explanation as to why the applicant would otherwise be covered by s 24. As there does not, therefore, clearly appear to have been any breach of s 24, that claim cannot be taken to reflect adversely on Mr Reilly.
[13]
Investigation work - Brike Investigations (Aust) Pty Ltd
The above company went into liquidation in 2004 by order of the Supreme Court in proceedings commenced by a creditor. It was struck off the ASIC register in 2006. It had operated a business as a commercial agent and private inquiry business and the applicant had purchased it from Mr Brian Keys, who remained a director until 22 January 2006, when the company was deregistered. Before his death Mr Keys denied being further involved in the company after about 1999, apart from purchasing a car from it in about 2002.
Notwithstanding the corporation's deregistration, the applicant continued to operate an account with the Northern Beaches Credit Union (which Mr Reilly had opened) in Brike's name until at least July 2013.
Complaint 5.1.1(c) before ILGA alleged that the applicant is not a fit and proper person by reason of his having undertaken, charged for, but not completed, investigation work in 2009 in the name of Brike Investigations without disclosing to the board of the club his personal business interest in that work. He also deposited payment for the work amounting to $7700 into his own bank account. In an OLGR record of interview dated 22 August 2013, the applicant gave a halting account of the investigation and how he had handled it. Asked about the invoice from Wright [scil. Brike] Investigations, he replied:
It was for…the - there was an investigation that was required in 2009… And as a result of that conversation it was a request from him to me that he needed to find out more about the people who did the crime investigations, your investigator….. So what had happened was my… Nervous about doing it myself with my company because of the conflicts with the Penn family involved in the club. So I said I would ask a mate of mine, Mr Brian Keyes, if he could be the head of the investigation, and he would out-source it twice a week. So that's why… investigation around the Penn family which myself and my operatives did to find out about his business affairs. And what happened when Brian covered in, it was only just to shield from my legal… from the board that it was actually me doing the investigation.
So - and we did, and we went - well, the investigation didn't get completed… It was a mistake - it was a mistake…. and in hindsight I would have been better off doing the investigation myself (exhibit R1, p 696).
[14]
Other breaches of duty as a licensee
The respondent contended that the applicant had failed to maintain his registered particulars, including his address as a licence holder, and that as a result SLED had been unable to locate him at his listed address. He was said to use different addresses with different agencies and organisations and failed to maintain the particulars required of him under legislation and his licence. As a licensee he had an obligation to notify the licensing authority within 14 days of a change to his address or other registered particulars.
The applicant maintained, however, that he had in fact notified SLED twice, although he had not used the correct form to do so (exhibit A1, annexure B). He had also written to SLED explaining his circumstances and the reason for his lateness in reporting, specifically his major heart attack and extensive surgery and other medical interventions (id., annexure C). He had not acted in flagrant disregard of his obligations but had failed to complete the correct form because of his health problems.
Although strictly speaking he should have made arrangements to ensure that his statutory obligations were fulfilled while he was undergoing medical treatment and rehabilitation, I do not think his failures in this respect adversely reflect on his fitness and propriety as a CAPI agent to a significant degree.
[15]
Fitness and propriety - conclusions
ILGA also found that Mr Reilly lacked prior industry experience and made no real effort to inform himself as to the duties of directors and the statutory compliance obligations of registered clubs. He could have taken steps to acquire a better knowledge of the club's statutory obligations and his own duties as a director, but did not. ILGA was satisfied that the applicant had not demonstrated the degree of knowledge expected from the chairperson of a registered club of the scale and complexity of the club concerned. His conduct in relation to the Brike Investigations invoice demonstrated a lack of integrity and frankness in his dealings with the board. Further, his responses to the complaint "convey[ed] little sense of Mr Reilly taking responsibility for his actions" (ILGA report, paras [973]-[977]).
As against that, it is not suggested that the applicant had ever stolen or embezzled money, whether as a club director or as a CAPI agent. He is 55 years of age and has no record of criminal conviction or charges. He first obtained a CAPI licence in 1981 and has been involved in the conduct of a business undertaking process serving, debt collection repossession of goods and the surveillance and investigation of persons, all without incident or complaint.
His application is supported by respectable referees, including some men of eminence, who have known him over a long period. Their references are not mere pro forma endorsements, but contain considerable detail about his conduct and personal attributes. Several of them state that the matters ILGA found against him strike them as being out of character. Overall, the character evidence he adduces is unusually strong.
He does not dispute ILGA's findings and acknowledges, although somewhat belatedly, that he behaved wrongly and makes it clear that he would not be seeking a master license but would only wish to operate on a part-time and modest scale.
The evidence suggests that the contraventions found by ILGA arose at least in part because he was inexperienced in club management and the duties of directors. He was out of his depth and allowed himself to be led astray by his enthusiasm for the sport of football and his commitment to the Manly-Warringah football club. He was involved in its workings at a highly turbulent time for the club and succumbed to the temptation to take shortcuts and engage in underhand dealings.
[16]
Public interest
As regards the public interest ground, the courts and the tribunal have held that the concept is designed to give the community's broader interests priority over private interests. In Comalco Aluminium (Bell Bay) Ltd v O'Connor (1995) 131 ALR 657, 681, Wilcox CJ and Keely J said: "The purpose of the reference to public interest is to ensure that private interests are not the only matters taken into account; to make clear that the interests of the whole community are matters for the Commissioner's consideration. The effect of the reference is to amplify the 'scope and purpose' of the legislation".
As Montgomery SM explained in Smith v Commissioner of Police, New South Wales Police Force [2014] NSWCATAD 184, [42] - [47], the discretion to make a decision "in the public interest" is confined only by the scope and purpose of the legislation itself: O'Sullivan v Farrar [1989] HCA 61; (1989) 168 CLR 210, 216. Applying a public interest test is a question of fact and degree: Re Queensland Electricity Commission, ex parte Electrical Trades Union of Australia (1987) 72 ALR 1, 5.
In Director of Public Prosecutions v Smith [1991] Vic Rp 6; [1991] 1 VR 63, at [75], the court said:
The public interest is a term embracing matters, among others, of standards of human conduct and of the functioning of government and government instrumentalities tacitly accepted and acknowledged to be for the good order of society and for the well-being of its members. The interest is therefore the interests of the public as distinct from the interest of an individual or individuals.
This tribunal's Appeal Panel pointed out in Commissioner of Police v Toleafoa [1999] NSWADTAP 9, at [25] that:
The 'public interest' is an inherently broad concept giving the appellant the ability to have regard to a wide range of factors in choosing whether to exercise a discretion adversely to an individual.
It is also well established that an applicant's personal interest in retaining a licence cannot outweigh the public interest in having full confidence in the professionalism of people involved in the industry (in that case the security industry): Blisset v Commissioner of Police, New South Wales Police Service [2006] NSWADT 114, [32].
The Appeal Panel explained in Constantin v Commissioner of Police, New South Wales Police Force (GD) [2013] NSWADTAP 16, at [33] that"
The "public interest' allows, we consider, for issues going beyond the character of the applicant to be taken into account. These may include concerns in relation to public protection, public safety and public confidence in the administration of the licensing system.
[17]
Conclusion
The applicant has a long record in the industry and has been successful and well regarded in it. His contraventions arose in the context of registered clubs legislation but were of such a character as to undermine his fitness and propriety to hold a CAPI licence. Further, at present it is not in the public interest for him to hold such a licence. He has, however, adduced substantial character evidence and there is reason for sober optimism about his rehabilitation. In my view (and without attempting to pre-empt the Commissioner's exercise of his discretion), if he completes the suspension without coming under adverse notice, he would, once the suspension period expires, have a stronger case for the grant of a licence, other things being equal.
[18]
Order
1. The decision under review is affirmed.
[19]
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 24 August 2017
Parties
Applicant/Plaintiff:
Reilly
Respondent/Defendant:
Commissioner of Police, New South Wales Police Force
He had become involved in league football as a junior player and in 1999 was managing and coaching an under 19 side in the Manly Junior League. In 2002, the Manly club was facing problems following a failed merger with North Sydney. He was approached by club members to represent them on a sub-committee to help deal with those troubles. Subsequently Manly privatised in 2004 and he was voted onto the board, becoming deputy chairman in 2005. In 2007 he became a member of the club's governing body. His duties as a board member included attending sub-committee meetings and attending community and sporting events to represent the club. In 2008 he was elected club chairman. In that capacity he would attend board meetings, and sporting events to represent the club, overseeing the club's developments and renovations to the new clubhouse. He also dealt with almost anything else that related to the club and its management. The position was voluntary, although he was paid an honorarium. Each board member received an honorarium of between $5000 and $7000.
His honorarium did not compensate him for the many hours of service provided to the board during a difficult period. At that time the club was under extreme pressure from the NAB bank to sell its assets because of its property's loss of value following the global financial crisis. The club had been attempting to develop its lands and build a new clubhouse, but the bank informed the club that it was out of time, which forced it to sell land to the Penn family at a greatly reduced price. After the sale the club renovated the ground floor, which took two years. It was a very stressful time and he would work every night as well as large parts of every day for the club. He was working at least 7 hours a day, on top of his own job. He did so because he loved the club and the Sea Eagles football team. His main source of income was still his work as a CAPI licence holder.
Between 2008 and 2012, in addition to being the club chairman, he was also the chairman of the Manly Warringah Rugby League Football Club, and deputy chairman of Sea Eagles Ltd. He was also on three sub-committees attached to those governing boards. Throughout that time, he remained the owner and a director of Brycorp. Because of his obligations towards the various boards and his role as sole operator of Brycorp, he unfortunately fell behind in his paperwork and reporting for Brycorp. Before serving on the various Manly Warringah boards, he had not had experience on boards at that level. He realized in retrospect that he should have educated himself concerning the roles of being a board member and a chairman. He had, however, been so busy during a time of turmoil in the clubs that he had failed to do so.
He said that he had never shielded his income, nor had he ever operated a trust account. He had always declared his payments. Looking back on what he did at the time and which had led to the ILGA investigation, he knew that there were reasons for what he did, but if he had his time again he would not do those things. Things would be different because he would concentrate on his business and his family. He got into a difficult position as chairman of the club and now realized that he was not prepared for the things that came with it.
His health declined in or about 2013 and he suffered a major heart attack in 2014, which led to 7 bypass surgeries. As a result of his health problems, he was unable to operate the Brycorp business. He had notified SLED of Brycorp's change of address by email on 20 August 2014. On 22 April 2015, he notified SLED that Brycorp was not trading, as a result of his ill health. The company was placed under administration on 12 November 2015. There are no current restrictions on him by ASIC. On 16 April 2016 the respondent notified him that his CAPI owner operator licence and operator licence were suspended with effect from 7 April 2016 on "fit and proper" and public interest grounds. Following exchanges of correspondence in relation to obtaining reasons and an internal review, his two CAPI licences expired on 24 March 2017. On 14 April 2017 he applied for the grant of a new CAPI licence.
He is aged 54 and is married with five children, three of whom are adults. The loss of his licences has had marked financial effects on him. He believes that if he does not have the opportunity of working in his industry, he would have to relocate his family. If he were to obtain a CAPI licence he would seek only an operator licence, which would require him to work under the supervision of an owner operator master licence holder. He would not seek to operate a company and would not be incorporating. He does not need a master license and does not wish to apply for one. Despite his health problems he would be able to work using a CAPI licence because he would manage the hours that he would work and would not work every day, but probably three days a week.
The applicant also relied on a statutory declaration dated 27 June 2016 which is in part a response to a statement by Katie Smallwood made on 25 November 2013 (exhibit R1, pp 505-513), in which Ms Smallwood stated inter alia that she had been employed by the applicant in July 2013 to put his accounts in order. The applicant had told her that he had not done his taxes or accounts since the 2009 financial year. He said "My primary need is to have my books and taxes caught up because of some enquiries going on involving the Manly Warringah Leagues Club and because of that I need to get caught up as soon as possible" (para 8). He further told her that a few years previously he had discovered that his secretary, Julie Petersen, had stolen a considerable sum of money from him and that she was still working for him on a reduced salary in order to pay it back (para 9).
While explaining to Ms Smallwood the way the company operated, Ms Petersen gave, in response to a query by Ms Smallwood about the numerous cheque and cash deposits and the "trust" liability account that the applicant had identified to her as contained within the 2009 financial accounts, an explanation of those entries. Ms Petersen explained that often when the applicant tracked down somebody for a bank or credit union or some other entity, they would give the money owed to the applicant, who would then place it into his bank account and subsequently return the money to the bank, credit union or entity. The applicant had told her that he did not have a specific trust account, with any of the funds retrieved deposited into his general business and personal accounts (para 17).
Ms Petersen also told Ms Smallwood that there were no amounts outstanding from 2009, as the money usually went in and out again immediately. That method applied to later years as well. To Ms Smallwood's question "Why didn't you have a trust account?", Ms Petersen replied that "We do it in a different way now, so it no longer needed to be done in the old way". She did not elaborate on what she meant, but Ms Smallwood understood that to mean that they did not take cash from people [debtors] on behalf of banks, credit unions or other entities because they did not have a trust account such as is required in order to collect money on a client's behalf (para 18).
In his statutory declaration of 27 June 2016, the applicant stated that, in her witness statement, Ms Smallwood had incorrectly identified what was referred to as "trust" moneys as client moneys. The moneys she referred to were in fact loans from the applicant himself to the business account. Mr Reilly said that Ms Smallwood had misunderstood when Ms Petersen had stated that creditors [scil. debtors] "would give the money owed to Bob". To the best of his recollection, it had never been the case since 2007 that he had received moneys directly from [debtors] into an account that he operated or controlled. During that time, he never gave the company's bank account details to any [debtor]. More than 90 percent of his work was for Capital Finance, which had extremely strict protocols regarding the recovery of moneys owing. His practice was to arrange for the funds to be paid directly to the finance company's account. He himself never received any money on behalf of clients from [debtors]. It was labelled a "trust" account incorrectly, because it never received or held moneys for clients. The funds that Ms Smallwood believed were trust moneys were personal transactions, namely loans to the business.
The applicant also relied on a statutory declaration of Ms Petersen dated 28 June 2016 in which she said inter alia that she had been working for Mr Reilly as a personal assistant from 2007. During that time neither Brycorp Investigation Services Pty Ltd nor the applicant received trust moneys for clients, nor operated a trust account. She knew from her personal dealings with the business records that neither Brycorp nor Mr Reilly received or held money on behalf of clients into any accounts operated by Brycorp or Mr Reilly for debt collection. Her understanding of the business practice had always been that when their clients' customers paid debts, they were always told to pay them directly into the client's nominated bank account. There was never any complaint from a client regarding payments from their finance customers not going directly into the client's account. It simply did not occur.
She recalled speaking to Ms Smallwood twice, once in person and once on the telephone. She came to the office only once, and that was the only time Ms Petersen met her. Her recollection was that her work was mainly, if not wholly, to assist the business' accountants, Hall Chadwick. The statement attributed to her by Ms Smallwood about the applicant collecting money from a debtor, paying it into his bank account and then returning the money to the bank, credit union or other entity was incorrect and did not reflect the way in which the business operated. It was definitely not the case that the applicant would deposit moneys into his bank account and then pay the client. That would constitute double handling and would give rise to complaints from the client. There would be no reason why the applicant would do that and it would make no sense. She definitely did not describe the business practice in that way to Ms Smallwood. She had explained to Ms Smallwood that if funds were collected from a customer for their clients, the agent would go directly to the client's bank and the funds would be deposited directly into their account in accordance with their instructions.
They are aware of the ILGA findings about his conduct. They had spoken to him about them, and he had acknowledged that the actions he took as a director were not always done with the highest level of prudence and discretion, and were completely out of character. He acknowledges a certain naïveté and inexperience on his part, accepts the adjudicator's findings and is remorseful for his actions. They are aware of the details of those findings and submit that in the scheme of things they are at the low end of the spectrum of such indiscretions. They could see nothing that was dishonest, let alone wilfully dishonest, nor done with selfish interests in mind.
The football club chairman, Darrell Williams, who had known the applicant for over 20 years, wrote that he was intimately aware of the internal political difficulties within the Manly clubs that were well-publicized and relentless. He had been a target of his opponents and there were significant attempts to destroy his character and business. Mr Williams is aware of the ILGA reports against his actions as a director, relating to cash advances, cashing of cheques, director expenses and an investigation of a fellow director. Despite those being serious matters, he was not aware of any material benefit that arose to the applicant. In his view that they were explained by his tendency to be more of a people person and can be fixed by greater attention to the details of money matters. Mr Williams wrote that he understood that commercial and private inquiry agents had to be persons of the utmost good character, and he had no hesitation in saying that Mr Reilly qualified on that criterion. There appeared to be a mismatch between the crime and the penalty, if this man were to lose his livelihood, a penalty that is not only financially onerous, but greatly affects his family, well-being and health. In his view, that outcome is not in the wider public interest.
To a similar effect is a reference from David Perry, a former general manager of the Sea Eagles from 2011 to 2014. He had always found the applicant to be very supportive and loyal to the club, placing its interests and those of its members first. The feedback from sponsors, members and Sea Eagles staff was always positive around his engagement and his "can do" attitude to assist them where possible as a board member. He and his family devoted much valuable and voluntary time to the clubs, and should be recognized for that. In his opinion, the criticism of the applicant was unfair and was deliberately driven to discredit his reputation and integrity. That was totally inconsistent with his character, and no doubt had exerted an impact on his health, family and livelihood.
In relation to administration practices regarding his actions as chairman, the applicant is aware of the reasons for the findings and the respondent could be assured that he had learned his lesson and there would be no repetition of any such practices.
Michael Knowles, a former New South Wales police officer, has known the applicant for nearly 40 years. They first met when the applicant was a volunteer lifesaver. In the time that Mr Knowles had known him both professionally and personally, he had found him to be an honest, hard-working family man. He had devoted enormous amounts of his time as a young man to the surf club, volunteering for beach patrols and later volunteering his time in the sport of Rugby League. Mr Knowles was aware of the great deal of attention he had received as chairman of the club and thinks that he had to deal with bullies who had a desire to see him fail. The applicant is a warm-hearted person who is great with people. He had explained that he was reprimanded for some sloppy dealings relating to paperwork, expenses and similar things that club directors need to get right. He did not, however, believe that Mr Reilly would do anything wilfully dishonest. He did not accept the negative things that had been said about him by those who wanted to attack him in his prior position. He had no hesitation in vouching for the applicant as a fit and proper person in his chosen career as a CAPI agent.
Max Delmege, of Delmege & O'Dea, Southport, Queensland, wrote that as the former owner and major sponsor of the Sea Eagles, he had served with the applicant on boards relating to the Manly Sea Eagles entities, and during that time he would always go out of his way for his friends, the players and fellow board members. That was, and still is, his passion; he has always been about the members and has dedicated hundreds of his own hours serving the community and the boards in which he was associated. He had always put other people's rights before his own, and because of "this fantastic trait", he had unfortunately been unfairly treated and undermined by people with ulterior motives. Mr Delmege was aware of the matters that led to his loss of authorisation to be a club director for 3 years, but did not believe they were matters that denigrated his fundamental honesty and character. He had told Mr Delmege that he had learned from the experience and would never make the same mistakes again. The applicant is an excellent family man, polite and courteous to all those who are fortunate enough to know him. He thought the withdrawal of his licences was "unbelievable" as the applicant had done nothing but great things for the club about which he is so passionate.
In another reference to a similar effect, John Winsor JP added that "Whilst Robert may not always be the best with paperwork, I have always found him to be of good character and I believe an asset to the community. He deserves to be able to work in the career that he is good at, assisting his many trusted clients. I do not believe you will have any further concerns in the future regarding his work as a licensed Commercial and Private Inquiry agent".
All the letters of recommendation are dated in June 2016, except that of Mr Delmege, which is undated.
Also found to have been established was complaint 1.1.2, alleging that there was payment of expense claims totalling $16,828.61 without assessment or approval and which were not for the club's benefit or approved by the members at a general meeting. Resolutions had been passed at the 2008, 2009 and 2010 annual general meetings permitting the approval of expenses for the "professional development" of governing body members, but the claims were not individually assessed or approved by the board. While each claim from the applicant was approved for payment by Mr Spray, the majority, in particular Cabcharge vouchers, were not for Mr Reilly's professional development, apart from the Leagues Club of Australia Annual Conference in November 2009. ILGA found complaint 1.1.2 established, but rejected a complaint relating to the applicant's approval of a contract for the payment of bonuses to Mr Spray (ILGA report at [752]).
Complaint 5.1.1(c) alleged that the applicant is not a fit and proper person by reason of the fact that he undertook, charged for, but did not complete, investigation work in 2009 in the name of Brike, a deregistered company, without disclosing his personal business interest in that work to the governing body, and that he deposited payment made by the club for the work into his own bank account. The work related to investigations concerning the Penn family, who were involved with the club. The applicant had asked Mr Brian Keys [from whom the applicant had purchased the Brike company] to be the head of the investigation and outsource it to him. He had said "And what happened when Brian covered in, it was only just to shield from my legal [sic] from the board that it was actually me doing the investigation". ILGA found that ground to have been established.
ILGA had found that the applicant had, as alleged, operated a bank account in the name of a company that had been deregistered, but was not satisfied that the conduct was unlawful or had been shown to be contrary to the Act. It therefore made no adverse finding on the applicant's fitness and propriety in that respect.
ILGA had concluded that the applicant is not a fit and proper person to hold a position of a member of the governing body of the club or any New South Wales registered club, on the basis of the evidence and material relied upon in the findings on particulars 5.1.1(c) and (d), by reason that his conduct in respect of the investigation into the Penn family. "[H]is subsequent attempt to shield his improper involvement in the matter from the Governing Body demonstrates a lack of honesty and diligence with respect to his duties to the Board" (ILGA report, [772]).
The report also found that the applicant had a lack of prior industry experience and made no real effort to inform himself about the duties of directors and the statutory compliance obligations of registered clubs. A director and chairman had to acquaint himself or herself with the core legislative obligations of a registered club, good corporate governance, and act in a manner that demonstrates frankness in his or her dealings with the rest of the board. It also concluded that the applicant had not demonstrated the degree of knowledge expected from the chairperson of a registered club of the scale and complexity. His conduct in relation to the Brike Investigations invoice demonstrated a lack of integrity and frankness in his dealings with the board (ILGA report, [973] - [977]).
Turning then to the public interest issue, the written submissions contend that, on the available evidence, the grant of an operator licence to the applicant would not be contrary to the public interest, because his conduct took place many years ago, he understands that his conduct was not as it should have been, and he had not been able to practise since his application for a licence was refused, which had already had significant consequences for him. He had the support of a range of eminent referees who attest to his integrity and has over three decades of knowledge about the type of work involved as a commercial agent and private inquiry agent. There is no question whatever about his knowledge of what is involved in his work. Nor is there any question about his ability as a commercial agent and private inquiry agent. He has had an unblemished career doing the actual work of a commercial agent and private inquiry agent.
In oral submissions at the hearing, Mr Fernandez on behalf of the applicant reiterated those contentions and pointed out that the applicant had no criminal convictions, nor had he ever been charged with an offence. The respondent was relying on conduct ending on 20 August 2012 when the applicant resigned as club chairman. There had been no adverse matters in the last 5 years, which showed reform on his part. He had never denied the 98 cash advances and had given ILGA his records of the transactions. For each electronic transfer of funds, the applicant had given the club a cheque for the same amount. Each transaction had been approved by the club secretary, Mr Spray, and recorded in the club's cash disbursements journal, which was presented to the next board meeting for retrospective approval.
There was no subterfuge or lack of transparency, and all matters had been brought to the attention of the club's governing body. The arrangement had been designed to help him deal with recurring expenses, and he gained no personal advantage from it. The transactions should not have happened, but involved no dishonesty.
Mr Fernandez then turned to the investigation work in the name of Brike, which also involved other people in the club and the club's business affairs. The applicant had explained the circumstances at the club leading to those events (ILGA report, [758]). At the relevant time the club had been in financial disarray and there were "toxic relationships" between various groups within it.
The allegation that the applicant had maintained a trust account without complying with the relevant obligations rested on the statement by Katie Smallwood. But that was a statement made to police which had not been tested. There is no evidence of any record kept by Ms Smallwood in relation to those conversations, which may not have seemed significant to her at the time. There is also evidence to the contrary from Mr Reilly and from Julie Petersen. The respondent argues that her criminal record made her an unreliable source of information, but those convictions related to a time when she was an assistant in a public school in 2000, 12 years earlier, and which resulted in suspended sentences.
It was held against the applicant that he had failed to maintain up-to-date required particulars with SLED, but the annexed emails showed that he had in fact notified SLED twice, although he had used the wrong form. The lack of some details was caused by the major heart attack he had suffered and the ensuing rehabilitation. There was no flagrant disregard of his obligations, but a failure to complete the correct form because of his health problems.
The applicant was supported by prominent referees who know the details of the ILGA proceedings. As all of the ILGA complaints arose in the context of the club, and he is not eligible to be a club officeholder now, the public could be reassured that he was fit and proper to hold a licence. Under Re Lenehan [1948] HCA 45, (1948) 77 CLR 403, the determination of fitness and propriety is to be based on whether the person is currently fit and proper.
In relation to the public interest, it had been 5 years since the most recent conduct complained of. There had already been significant punishment, including the public denunciation of the conduct by ILGA. The applicant's statutory declaration contains evidence of rehabilitation, and it is notable that he does not challenge ILGA's findings. He has explained how he would conduct his business if granted a licence. He had a record of over 30 years as an agent and there was no question about his knowledge or ability, as could be seen from the list of clients he had served.
Thus, while ILGA was concerned with the applicant's fitness and propriety to serve as a director of a registered club (the Manly-Warringah Rugby League Club Ltd., liquor licence No. LIQC30228452), the tribunal's focus in this case is on his suitability to be a commercial and private inquiry agent. The two occupations may involve some different considerations, although knowledge, honesty and ability are required in both cases. Further, as the High Court pointed out in Re Lenehan [1948] HCA 45, (1948) 77 CLR 403, the question to be decided is whether the applicant is currently fit and proper.
The submissions presented by the respective parties in this case do not in all instances appear to match exactly, which is perhaps partly due to the fact that several items examined by ILGA gave rise to different breaches. Some items were found by ILGA not to have been established, and there is no need to canvass them in these reasons. The following therefore appear to be the main areas of contention between the parties.
Subject to the comments below about the obligation to maintain a trust account, I consider that Ms Smallwood's recollection is correct. The applicant did not operate a trust account and by 2013 was no longer receiving moneys from debtors on behalf of clients but had done so, at least on some occasions, at earlier times. I also accept Mr Hearnden's submission that "The only conclusion that can be drawn from the evidence is Mr Reilly's accounts were chaotic and conducted in such a manner that it is impossible to have any degree of certainty as to what was occurring. No proper records had been maintained for a period of 4 years". I so find.
The significance of that conclusion for the resolution of the current application is unclear, however. The reason, as was pointed out by the applicant's solicitors in their 28 June 2016 letter to the respondent (exhibit R1, pp 97 - 103) is that under schedule 2, cll 1 and 2, of the Act, only master licensees are required to maintain trust accounts when taking money on behalf of another person. Master licences are dealt with in division 1 of part 2 of the Act, while operator licences are covered by division 2 of part 2.
But Mr Reilly's licence was not a master licence. He held an operator licence and an "owner operator" licence, but no master licence. Consequently, he did not receive "trust money" as that term is defined under schedule 2, cl 1. That argument was not repeated in the submissions made in respect of these proceedings, and no submission was advanced that would show why an owner operator licence was to be treated as a master license. The applicant's argument therefore appears prima facie to be correct, and the respondent did not challenge it at the hearing.
The picture is somewhat clouded, however, by the fact that the respondent's notification of suspension of the applicant's CAPI licences dated 11 April 2016 opens with the words "I write to inform you that I am reviewing your suitability to hold an Operator Licence and a self-employed Owner Operator Master licence" (my emphasis; exhibit R1, p 29). Further down, the notification states "notification is hereby given of the suspension of your Operator Licence number 40943833 and Master licence 410705610" (my emphasis).
On the other hand, while the documentary evidence contains copies of licences issued to the applicant (exhibit R1, pp 8, 225-229), they do not appear to be master licences. Further, no statutory basis in the CAPI Act or the regulations for a category of "owner operator" licences has been drawn to my attention. It could thus be significant that the ground relating to trust account obligations was not relied on in the respondent's 30 May 2017 refusal of the applicant's license application.
It is not disputed, and the evidence does not suggest otherwise, that the applicant did not steal or otherwise misappropriate any funds received from debtors on behalf of creditor clients. Consequently, even assuming that Ms Smallwood's recollection is correct, the applicant's conduct in paying debtors' money into his own "miscellaneous" account before transferring it to the client does not warrant a serious adverse finding against him.
In the circumstances it would therefore appear imprudent to make any adverse findings against the applicant in relation to the operating of a trust account and the failure to meet, or not meet, the obligations attendant on it.
Poorly organized and inappropriate for a director of a registered club though his accounting system may have been, it is not enough to justify finding that he is not a fit and proper person to hold a CAPI operator's licence. Although it related directly to the purposes of the CAPI licensing scheme and the objects of the Act as stated in s 3, it involved no dishonesty and could have been rectified by an overhaul of his accounting methods. His apparent dereliction as regards his obligations to file tax returns could be of greater moment, but there is insufficient evidence to make a finding on that point.
He was then asked "which company of yours ran the investigation?", to which he replied that it was [Brycorp] Investigations. As to how Brycorp was paid, he said "a cheque went into my personal account and I invoiced straight away [Brycorp] Investigations at the time… company". To a question about where the $7700 went, he answered "Into my company account". He then said it was not the Brike account: "No, it was deposited originally into the [Brike]… that was left with me, and left as a director…told me. It was my personal responsibility, the account…." (Exhibit R1, p 697).
The payment to Brike was drawn from Mr Delmege's honorarium account, which was conducted by the club. As he did not need the money, Mr Delmege did not draw on that account. On 12 June 2013, Mr Delmege was visited by detectives who showed him inter alia a copy of a cheque made out to Brike Investigations to the value of $7700 dated 26 May 2009, a copy of his honorarium account and a copy of an invoice from Brike Investigations to Delmege Commercial for $7700. "When I was shown this I stated that 'I have never seen these before'. When it was explained to me that money was paid from my Honorarium account to pay for the Brike Investigations invoice with the cheque dated 26 May 2009, my reply was 'It looks like they've taken my dough'…. I don't remember ever giving authorisation for this invoice to be paid from my Honorarium account, nor do I recall requesting that any investigation had been conducted on my behalf, as I had not seen a report as [to] the results of any investigation" (exhibit R1, p 216).
In a letter from his then solicitors to the club's solicitors in connection with a disciplinary charge dated 31 August 2012, the applicant stated that he had had no association with Brike or any successor business with a similar name since 2003. He added, "Brian Keyes advised me that he had done work for Max Delmege, who had agreed to have any Tax Invoice paid out of his Honoraria with [the club]. This was discussed by me with Peter Spray and Max Delmege by way of phone in Peter Spray's office…. I was given the Invoice by Brian Keys in an envelope and handed it, so far as I recall, unopened, to Peter Spray for payment, as previously discussed…. Other than physically handing over the Tax Invoice, this matter did not involve me in any way. I had no involvement with the entity issuing the Tax Invoice and my actions could not cause prejudice to the Club" (exhibit R1, pp 528 - 529).
In the ILGA proceedings, he denied that he had undertaken the investigation work. He said he had referred the matter to Mr Keys who had performed the work himself. He asserted that Mr Keys had provided him with the tax invoice and that his only role had been to refer the assignment to a friend to undertake the work. While acknowledging that he remained a signatory to the Brike bank account, he denied that he had been involved in the operation of the Brike account, as he had had no involvement in the company since 2002. He argued that he had no obligation to disclose the assignment, even if he had accepted the work, because he would be acting in his "personal professional capacity". He contended that he did not undertake the investigation and that he "had nothing to disclose" to the board. He is role was only to refer the assignment to a friend (ILGA report, paras [296] - [305]).
ILGA did not accept that explanation. It concluded that "The Authority is satisfied that Mr Reilly is not a fit and proper person to hold the position of a member of the governing body of the Club or any registered club in New South Wales… by reason that his conduct in respect of the investigation into the Penn family and his subsequent attempt to shield his improper involvement in the matter from the Governing Body demonstrates a lack of honesty and diligence with respect to his duties to the Board" (id., para [772]).
The applicant did not seek to dispute that finding, just as he had not sought to re-agitate ILGA's other conclusions. He explained the circumstances at the club leading to those events, contending that at the relevant time the club had been in financial disarray and there were "toxic relationships" between various groups within it. While that is no doubt true, it also remains true that the applicant placed himself in a position where his personal interest in the investigation work conflicted with his duty to the board and he failed to disclose that conflict to the governing body. He also engaged in a circuitous subterfuge to arrange payment to himself indirectly, in the process appropriating Mr Delmege's funds without authority. I find that this sequence of events involved dishonesty on the applicant's part and therefore supports the conclusion that he is not a fit and proper person to hold a CAPI licence.
As is indicated above, some of those shortcuts and dealings are of sufficient seriousness to reflect adversely on his honesty and integrity. The use of club funds to furnish a kind of overdraft for his own businesses was grossly improper. His expense claims for "professional development" went far beyond the occasional exaggeration or imaginative classification. They constituted a serious dereliction of duty.
The concealment from the board of his involvement in the Penn family investigations and his unauthorised use of Mr Delmege's honorarium account in his roundabout laundering of the $7700 payment for the investigation services shows him in a poor light indeed. Although those matters related to his duties as a club director and chairman rather than as a CAPI agent, they point to a serious lapse in integrity that runs against the stated objectives of the CAPI Act and leads to the conclusion that he cannot, as was said in Sobey, "be safely accredited to the public… as a person to be entrusted with the sort of work which the licence entails". I therefore find that he is not a fit and proper person to hold an operator licence within the meaning of the CAPI Act.
Also relevant to the public interest is the fact that occupational regulatory schemes such as the CAPI Act not only directly protect the public from harm, but also help to preserve public confidence in the regulated activity and its members: Health Care Complaints Commission v Do [2014] NSWCA 307, [34] - [39]; Kirbach v Health Care Complaints Commission (No.2) [2015] NSWCATAD 234. The tribunal should place itself in the position of a member of the public knowing of the applicant's associations or record, and consider whether that person would object to having the applicant perform the relevant services: Naziry v Director-General, Ministry of Transport [2004] NSWADT 40, [55].
Mr Fernandez pointed out that five years have elapsed since the most recent conduct complained of and that the applicant has already been the subject of significant punishment. His conduct was publicly denounced by ILGA and he now recognizes, and takes full responsibility for, the wrongfulness of his actions. He does not challenge ILGA's findings. He has a clear picture of how he would run his business if his licence were granted and points out that with 30 years as an agent, there has never been any question about his knowledge or ability, as can be seen from the names of some of the clients he had served. He has no record of convictions or criminal charges.
I accept those submissions, including that the applicant has already suffered significant punishment. That includes the public denunciation of his conduct by ILGA. As I pointed out in Kirbach (at [39] - [45]), publicity of that kind supports the operation of general deterrence in the professional context by denouncing misconduct and helping to maintain public confidence by signalling that those whose conduct does not meet the required standards will not be permitted to practise. The widespread dissemination of information about the contravention of professional standards and the sanctioning of offending behaviour forms an integral part of the deterrence mechanism.
At the same time, a countervailing consideration is that the public interest is served if persons are able to engage in gainful business or employment and thereby support themselves and their families, rather than burden the taxpayer.
Nevertheless, in applying the public interest test, the tribunal should, as Naziry opined, place itself in the position of a member of the public knowing (in this case) of the applicant's contraventions as found by ILGA, and consider whether that person would object to having the applicant perform commercial agent and private inquiry agent services. In my view a member of the public aware that the applicant had been subjected to the longest period of suspension allowed by the relevant legislation for breaches of legal duty involving dishonesty, under suspension orders that are still in force, would have serious misgivings about engaging his services as CAPI agent, given the delicate nature of many of the services rendered by licensees and the dependence of all concerned on the honesty and integrity of the agent. Confidence in the licensing system and in those pursuing that occupation would be compromised. I therefore find that it is not in the public interest for the applicant to hold a CAPI licence at the present time.