The Tribunal DECIDES that the Tribunal should apply the Corporations Act 2001 (Cth) as amended by the Financial Sector Reform (Hayne Royal Commission Response - Stronger Regulators (2019 Measures)) Act 2020 (Cth) to the present matter.

The Tribunal DIRECTS that the matter be listed for a case management directions hearing.

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STATUTORY INTERPRETATION - amended legislation - where Corporations Act 2001 (Cth) was amended by the Financial Sector Reform (Hayne Royal Commission Response - Stronger Regulators (2019 Measures)) Act 2020 (Cth) during the course of the Tribunal's proceedings - whether the Tribunal should apply the Corporations Act 2001 (Cth) in its current form or its pre-amended form - effect of transitional provisions - Tribunal to apply Corporations Act 2001 (Cth) as amended by the Financial Sector Reform (Hayne Royal Commission Response - Stronger Regulators (2019 Measures)) Act 2020 (Cth).

Acts Interpretation Act 1901 (Cth): s 8(c)

Administrative Appeals Tribunal Act 1975 (Cth): ss 2A; 26; 41(2); 42D; and 43(6)

Corporations Act 2001 (Cth): ss 913BB; 920A(1); 920B; 1666; and 1667

Crimes Act 1914 (Cth)

Financial Sector Reform (Hayne Royal Commission Response - Stronger Regulators (2019 Measures)) Act 2020 (Cth)

Taxation Administration Act 1953 (Cth)

Frugtniet v Australian Securities and Investments Commission ( 2019) 93 ALJR 629; [2008] HCA 31

Minister for Immigration and Ethnic Affairs v Pochi [1980] FCA 85; (1980) 31 ALR 666

Re Costello and Secretary, Department of Transport [1979] AATA 184; (1979) 2 ALD 934

Shi v Migration Agents Registration Authority (2008) 235 CLR 286; [2008] HCA 31

1. The Financial Sector Reform (Hayne Royal Commission Response - Stronger Regulators (2019 Measures)) Act 2020 (Cth) (the Amending Act) made a number of amendments to the Corporations Act 2001 (Cth) (the Corporations Act). The amending legislation was passed after the Australian Securities and Investments Commission (ASIC) made its decision on the current application. ASIC says the Tribunal should apply the Corporations Act as amended in the course of the Tribunal review even though the decision was made under the old law.
2. ASIC has taken this position in several cases currently before the Tribunal where the law has changed after the original decision was made but before the Tribunal completed its review. ASIC asked the Tribunal to have a preliminary hearing in these proceedings to determine whether there is any difficulty in the approach for which it contends. Our answer to that question is likely to be of interest in the other proceedings - although of course the Tribunal as constituted in each case will need to reach its own conclusion.
3. ASIC argues the Tribunal would fall into error if it insisted on applying the law as it stood at the time of the reviewable decision. In dealing with that proposition, we must address the issues highlighted in the High Court's decisions in Shi v Migration Agents Registration Authority (2008) 235 CLR 286; [2008] HCA 31 (Shi) and Frugtniet v Australian Securities and Investments Commission (2019) 93 ALJR 629; [2019] HCA 16 (Frugtniet) which go to the nature of the Tribunal's review: specifically, whether the amendments have the effect of changing the question we are asked on review to the point where it is different in nature from that before the original decision-maker.
4. The applicant, Mr Mark Schroeder, did not provide any submissions in relation to this issue. Further, on 2 July 2020, Mr Schroeder wrote to the Tribunal requesting that he be excused from the interlocutory hearing and indicated that he "neither consents to, or opposes, the relief sought by ASIC in respect of the jurisdiction issue at the interlocutory hearing."
5. We are satisfied at least one of the questions we are being asked to address on review is different in kind from that which was available before the primary decision-maker. That conclusion would ordinarily create an obstacle to the Tribunal's review proceeding in relation to such questions given the principles referred to in Shi and Frugtniet. As it happens, we are satisfied the transitional provisions in the Corporations Act allow the Tribunal's review to proceed, including as to that question.
6. We will begin by briefly discussing the reviewable decision in this case before turning to the recent amendments to the Corporations Act, which include transitional provisions. We will then discuss the nature of the Tribunal's review process, the effect of the transitional provisions, and the implications for the conduct of these proceedings.

1. Mr Mark Schroeder was a director of a company in the business of providing financial services. During the course of 2019, ASIC became aware of concerns about the way in which the company's business was being conducted. After completing an investigation, ASIC took regulatory action against the company. ASIC alleged a number of contraventions of the financial services laws in Chapter 7 of the Corporations Act. ASIC also took action against Mr Schroeder.
2. On 11 June 2019, a delegate of ASIC conducted a hearing in relation to the alleged contraventions. The delegate had to consider whether a banning order should be made against Mr Schroeder under s 920A of the Corporations Act. Section 920A(1) sets out the various grounds which might enliven the discretion to make a banning order. The scope of the banning order is determined with reference to s 920B.
3. At the relevant time, the grounds set out in s 920A(1) included the following:

ASIC may make a banning order against a person, by giving written notice to the person, if:

...

(d) ASIC has reason to believe the person is not of good fame or character

(f) ASIC has reason to believe that the person is likely to contravene a financial services law; or

(g) the person has been involved in the contravention of a financial services law by another person;

1. In her reviewable decision dated 21 October 2019, the delegate concluded the company had contravened financial services laws. She also concluded the discretion to make a banning order against Mr Schroeder was enlivened because:
   • she was satisfied the ground referred to in s 920A(1)(g) was made out because she found Mr Schroeder was involved in the company's contraventions of financial services laws; and
   • she was satisfied the ground referred to in s 920A(1)(f) was made out because ASIC had reason to believe Mr Schroeder was likely to be involved in a contravention of financial services laws.
2. The delegate decided in the applicant's favour on the 'good fame or character' ground in s 920A(1)(d). She explained she was not satisfied ASIC had reason to believe Mr Schroeder was not of good fame or character because his shortcomings "relate to lack of competence and understanding...as Mr Schroeder did not pay sufficient attention to his responsibilities". She concluded these shortcomings did not demonstrate Mr Schroeder "has a serious flaw of character".
3. After making the findings on each ground, the delegate exercised the discretion in s 920A to ban Mr Schroeder from providing financial services for a period of six years. Mr Schroeder has asked the Tribunal to review that decision.

1. The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry delivered its final report in February 2019. After considering the recommendations, the Commonwealth Parliament passed a legislative package that reformed a number of key statutes. The Amending Act effected a number of changes to the Corporations Act, including the following amendments of particular relevance in these proceedings:
   • the 'good fame and character' test in s 920A(1)(d) was changed to a 'fit and proper person' test;
   • a new s 913BB was created which identified the matters that had to be considered in applying the 'fit and proper person' test in the amended s 920A(1)(d); and
   • ASIC was given additional, broader powers to craft banning orders under s 920B(1).
2. The Amending Act was assented to on 17 February 2020 and commenced the following day. The Amending Act also inserted transitional provisions into the Corporations Act.
3. The new s 1666 of the Corporations Act provides that, when making a banning order after the commencement of the Amending Act, "regard may be had to acts, omissions, states of affairs or matters before, at or after that commencement".
4. Section 1667 goes on to provide:

(1) An order made under subsection 920A(1), that is in force immediately before the commencement of [the relevant provisions of the Amending Act], continues in force (and may be dealt with) as if it had been made under that subsection as amended by that Act.

1. The meaning and effect of these transitional provisions is important to the outcome of this interlocutory application.

1. We have already explained that ASIC's delegate relied on two grounds in the pre-amendment version of s 920A(1) when she decided to make the banning order. The delegate was not satisfied the 'good fame and character' ground was made out since the evidence pointed to issues of competence rather than integrity. Now that the reviewable decision has come before the Tribunal, ASIC has signalled its intention to refer to additional grounds that were not considered by the delegate, including at least one ground - the 'fit and proper person' ground - which did not actually exist at the time the reviewable decision was made. We surmise ASIC believes it has better prospects of making out the grounds in s 920A(1)(d) following the amendments than it had under the old test. ASIC has also foreshadowed its intention to argue in favour of broader, more detailed banning orders than were possible under the old law.
2. At the interlocutory hearing convened to consider this issue, counsel for ASIC, Mr Lloyd of Senior Counsel, argued this was one of those situations where the transitional provisions said the new law was applicable in the review rather than the old. He explained those provisions permitted - indeed, they required - ASIC to thereafter evaluate conduct suggesting a lack of fitness or bad character with reference to the 'fit and proper person' test instead of the 'good fame and character' test. He pointed out ASIC could revisit banning orders it had previously made relying on the 'good fame and character' ground (including cases in which a banning order was made on that ground and that decision was subsequently set aside on review by the Tribunal) and make a fresh decision on those matters with reference to the 'fit and proper person' ground. He also pointed out the only thing preventing ASIC from immediately revisiting its decision and applying the new law in this case was the restriction found in s 26 of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act). He said there was no doubt ASIC would be required to (and would) apply the new law if the Tribunal were to remit this matter to ASIC for reconsideration. Given the Tribunal steps into ASIC's shoes upon review, Mr Lloyd argued the Tribunal should apply the same law that ASIC was obliged to apply. Mr Lloyd pointed out the instruction in s 1667 referred to a decision made under the old law being "dealt with...as if it has been made under [the amended legislation]". The effect of those provisions was clear, we were told: the law as amended should be applied to any dealing with a banning order that has already been made, including one made under the old law. Since the banning order is 'dealt with' in the course of the Tribunal's review, the Tribunal is also bound to apply the law as amended.
3. Mr Lloyd also argued there was no need to refer to the provisions of the Acts Interpretation Act 1901 (Cth) (the AI Act) that were in force as at 1 January 2005, which is the relevant date.[1] He noted s 8(c) of the AI Act sets out rules for what happens when a statutory provision is repealed and the amendment effects a "right, privilege, obligation or liability acquired, accrued or incurred" under the repealed provision. Mr Lloyd argues the amendments to the Corporations Act we are discussing here did not impact on an accrued right. He added that, in any event, the rule in s 8(c) of the AI Act only applies in default of transitional provisions that address the question.
4. We ultimately agree the issue is resolved with reference to the transitional provisions in the Corporations Act, but the route to that conclusion follows a difficult path.

THE NATURE OF THE TRIBUNAL'S REVIEW AND THE IMPLICATIONS FOR THIS CASE

1. Virtually all administrative decision-making involves a decision-maker answering a question or questions derived from legislation. That is certainly the case for the Tribunal, which has no inherent decision-making power. The Tribunal's powers and processes on review are determined by the AAT Act and the enactments which confer jurisdiction to review particular decisions.
2. The word 'review' is important in this context. Section 2A of the AAT Act explains the Tribunal was established for the purpose of providing a "mechanism of review". Kiefel J (as her Honour then was) explained in Shi that the precise nature of the review will vary depending on the terms of the statute which confers the jurisdiction: at [132]. (The Taxation Administration Act 1953 (Cth) (the TA Act) illustrates the point_._ The TA Act adapts the Tribunal's review of objection decisions made by the Commissioner of Taxation. It provides for a different onus of proof and private hearings. It also modifies or excludes a number of other provisions in the AAT Act which would otherwise apply including s 41(2), which contains the stay power.) The concept of a 'review' is central to the Tribunal's role as an executive decision-maker that exists within the continuum of administrative decision-making. The Tribunal uses the review as a vehicle for reaching the correct or preferable decision in the particular case, and to model good decision-making behaviour and establish norms that will assist decision-making in subsequent cases.
3. The courts - including the High Court in Shi and Frugtniet - have explained that the review proceeds by having the Tribunal step into the shoes of the decision-maker so it can re-make the decision under review according to law. The Tribunal is tasked with providing a fresh and objective answer to a question that was asked (or which should have been asked) of the original decision-maker. That conclusion follows from s 43(6) of the AAT Act, which deems the decision of the Tribunal to be the decision of the decision-maker.
4. While the question is re-asked upon review, Shi makes clear the material that might be relevant to the answer will be the material which is available at the time of the Tribunal's decision unless the statute authorising the review provides the Tribunal's consideration should be confined to material that was available at some earlier time. As Kirby J explained in Shi, that makes sense when one appreciates the Tribunal's review usually extends beyond simply checking for error. The Tribunal may be impeded in the performance of its larger role in the continuum of executive decision-making if it were limited to the material that was available to the original decision-maker: at [50]-[51]. It follows - subject to the legislation - a litigant may ordinarily adduce relevant evidence that:

(a) was available at the time of the original decision but not placed before the original decision-maker; and

(b) becomes available subsequent to the original decision.

1. Experience shows the Tribunal's decision on review might be different from that of the original decision-maker precisely because the Tribunal has regard to more extensive material. A different outcome on review does not necessarily suggest the original decision-maker was wrong when the reviewable decision was made. The original decision-maker might have reached an entirely appropriate decision given the material before it. The Tribunal, assisted by the parties, is in a better position to make a decision on review because it knows more about the problem at hand.
2. While the decision in Shi was principally concerned with the scope of the evidence that could be considered as part of the review, the decision in Frugtniet focused on the permissible scope of the review process itself. Frugtniet made clear that, in conducting its review, the Tribunal:

(a) goes equipped with the same statutory powers as the original decision-maker;

(b) is subject to the same limits imposed by the relevant statute; and

(c) must pursue the same objectives that are evident in the relevant legislation.

1. In Frugtniet, the High Court concluded the review foundered because the Tribunal did not observe the limits on the decision-making process that were imposed by the Crimes Act 1914 (Cth). The Tribunal misunderstood the legislation and concluded it was able to have regard to matters the original decision-maker was required to ignore when the reviewable decision was made - matters which the original decision-maker would also be required to ignore if the matter were to be remitted for reconsideration. The Tribunal effectively eschewed the shoes of the original decision-maker and found a more commodious pair of its own to negotiate different terrain. That was impermissible. As Bell, Gageler, Gordon and Edelman JJ explained in the majority judgment (at [53]-[54]):

The AAT and the primary decision-maker exist within an administrative continuum. The AAT has no jurisdiction to make a decision on the material before it taking into account a consideration which could not have been taken into account by the primary decision-maker in making the decision under review and which could not be taken into account by the primary decision-maker were the AAT to remit the matter to the primary decision-maker for reconsideration.

1. The majority's reasoning points to the importance of there being continuity in subject matter across the continuum of administrative decision-making. To put it another way, the original decision-making and steps in the review process must operate in a synchronised way. It follows that the Tribunal's ability to consider additional evidence is ordinarily limited to the kind of evidence that could have been placed before the original decision-maker if the decision-maker were deciding the matter again at the time of the Tribunal's hearing. As Kiefel CJ, Keane and Nettle JJ explained (at [15]), subject to the effect of the legislation, the Tribunal will not be permitted to take account of matters where to do so "would change the nature of the decision" or "the question before the original decision-maker". To similar effect, the majority judgment of Bell, Gagler, Gordon and Edelman JJ held that the primary decision, and the statutory question it answers (or should have answered), marks the boundaries of the Tribunal's review: at [51]. If the Tribunal strays beyond those boundaries, it ceases to be a review body and disrupts the continuity of the decision-making process.
2. Ordinarily, the Tribunal applies the law that was applicable at the time of the original decision: see Frugtniet at [14] per Kiefel CJ, Keane and Nettle JJ; see also Shi at [134] per Kiefel J; see also Minister for Immigration and Ethnic Affairs v Pochi [1980] FCA 85; (1980) 31 ALR 666 at 670-671 per Smithers J. But that is not inevitably the case. Re Costello and Secretary, Department of Transport [1979] AATA 184; (1979) 2 ALD 934 - and the decisions of courts and the Tribunal which followed it - make clear that where there has been a change in the law, the Tribunal must have regard to (a) the nature of the decision under review and (b) the terms of the amending legislation when determining whether the Tribunal should apply the new law, or the old: at 943. If the statute makes clear the Tribunal should apply the new law instead of the old, so be it.
3. ASIC says the question in this case is straight-forward. The original decision-maker was tasked with deciding whether to ban the applicant from providing financial services under s 920A. ASIC argues the question is exactly the same on review. While the grounds and some of the detailed powers available may have been altered, ASIC argues the question - and therefore the nature of the decision - remains substantially the same. We do not think it is that simple. As Kiefel J explained in Shi at [142], one must be conscious of the elements of the question or questions posed by the statute.
4. While the discretion to ban is at issue here, ASIC does not propose to rely on all the same grounds as the delegate. One of the grounds that ASIC now presses did not even exist at the time of the delegate's decision, so it is not as if it was in the contemplation of the applicant or the delegate at the time. That is potentially important because each ground sets out an element of the statutory question in the form of a test which potentially enlivens the discretion to make the banning decision. It follows that an important element of the ultimate question identified by ASIC should be framed as: 'Does the decision-maker have reason to believe the applicant is not a fit and proper person?' That question is, on its face, a different question from the one posed before the delegate, which was: 'Does ASIC have reason to believe the applicant is a person of good fame and character?' While there is likely to be an overlap in the evidence required to answer the 'good fame and character' and 'fit and proper person' questions, they are still distinct enquiries that potentially yield different answers. Indeed, the whole point of the reform to s 920A(1)(d) is that some individuals who escaped regulatory action under the old test could now be subject to banning orders under the new test. It is no accident that the Amending Act includes the words 'Stronger Regulators' in its title.
5. Changing the grounds on which a decision is made during the course of the review process will not inevitably transform the nature of the question before the Tribunal to the point where the nature of the decision under review has changed, so that it is a different question being considered. Much depends on the circumstances and one must have careful regard to the statutory power being exercised. A measure of flexibility is required given that administrative decision-making is a dynamic process. The facts and arguments that must be considered by a decision-maker may evolve substantially over time. The evidence and the arguments often evolve in important ways between the time of the primary or original decision and the Tribunal hearing. More information might come to hand in the course of preparing for the hearing, or as a consequence of the Tribunal's forensic fact-finding processes. Matters that might previously have been obscured or judged irrelevant or inconsequential to the reviewable decision in question might come to be seen in a new light upon review. That `means the review might proceed (and the Tribunal's decision might end up being made) on additional or different grounds from those considered relevant by the original decision-maker - provided the additional or different grounds were available to the original decision-maker, even if they were not considered at the time. That sort of evolutionary decision-making process is to be expected given the Tribunal's role in the decision-making continuum. If the Tribunal is to make the correct or preferable decision on the material before it at the time of the hearing, it must have the flexibility to respond to evolution in the case. That evolution need not destroy the continuity and synchronicity of the decision-making process.
6. Where new evidence comes to light in the course of the review, or where additional or alternative grounds or criteria become apparent, the Tribunal must assess how it should proceed. Where the Tribunal is satisfied the question on review is the same as that before the original decision-maker, albeit that additional or different grounds or material have come to light, the review can proceed. Of course, a tailored procedural response may be required where the new material creates concerns about procedural fairness. The Tribunal might allow a party extra time to prepare its case, for example. It might also consider remitting the matter to the original decision-maker for reconsideration under s 42D of the AAT Act. A remittal under s 42D might be appropriate where the decision-making process can be more efficiently or conveniently advanced by the original decision-maker rather than continuing the process before the Tribunal with its more court-like procedures. Once that reconsideration has concluded, the Tribunal's review can resume if necessary.
7. In this case, the ultimate question and most of the additional grounds that ASIC has identified as being potentially relevant were available to the original decision-maker, even if they were not considered relevant at the time. We do not foresee any difficulty with those grounds forming part of the review process, subject to any tailored procedural responses that might be considered in the ordinary course. We are satisfied the nature of the review would not be changed (and the continuity and synchronicity of the review process would not be disrupted) as a consequence of those matters being considered by the Tribunal in the ordinary course.
8. The inclusion of the revised ground in s 920A(1)(d) presents more difficulty. In our view, the revised ground changes the question before the original decision maker. We do not agree with the submission made by ASIC that the question would be the same on review.

1. The Tribunal is a creature of statute. It must act in accordance with the law. As the High Court has made clear in Shi and Frugtniet, the Parliament can legislate to change the ordinary review process provided it does so in clear terms. We are satisfied that has occurred in this case as a result of the transitional provisions. Sections 1666 and 1667, when read together in their context, make clear that the Tribunal's review would proceed on the amended legislative provisions, including the revised ground in s 920A(1)(d).
2. Section 1666 of the Corporations Act refocuses the attention of the decision-maker on the amended legislation. The section provides that, when making a banning order after the commencement of the Amending Act, "regard may be had to acts, omissions, states of affairs or matters before, at or after that commencement". In the context, this means that if the matter is remitted to the original decision maker for reconsideration, the reconsideration would proceed having regard to the amended provisions (including the 'fit and proper person' ground which is clearly different from the ground that was considered by the delegate when she made the reviewable decision in October 2019) and with reference to matters which occurred before the commencement of the Amending Act.
3. If the instruction in s 1666 applied to the original decision-maker on reconsideration but not to the Tribunal on its review, the questions before each would be different. Bell, Gageler, Gordon and Edelman JJ explained in Frugtniet why that was problematic. Their Honours made clear that the Tribunal would disrupt the administrative decision-making continuum if it applied different considerations from those which would bind the original decision-maker were the matter remitted for reconsideration: at [53].
4. This brings us to s 1667. Section 1667 provides that a decision made under the old law continues in force, and may be dealt with, as if it had been made under the amended provisions. The effect of that section for our purposes is tolerably clear, especially if one assumes Parliament was conscious of the High Court's reasoning in Frugtniet. Section 1667 deems the banning decision to have been made as if the new provisions were in force at the time. It follows that the deeming effect extends to permit the banning order to be dealt with by the Tribunal on review as if it were made by the delegate under the amended law. (We are satisfied the Tribunal's review process amounts to dealing with the banning order in the sense contemplated in s 1667.)
5. That means the review may proceed having regard to, amongst others, the revised ground in s 920A(1)(d). The revised ground in s 920A(1)(d) is effectively deemed to have been available to the delegate when she made her decision (albeit that it was not considered, for obvious reasons). In that sense, the Tribunal is able to consider the 'fit and proper person' ground as if it is just another late-breaking development in a dynamic but synchronised review process. That interpretation of the transitional provisions is consistent with the thrust of the reforms. Parliament intended to introduce a more robust regulatory process that urgently provided ASIC with additional powers. In doing so, Parliament surely did not intend to trap decisions already made by ASIC but subject to review by the Tribunal in a procedural cul-de-sac that could only be resolved by requiring a remittal in every case to reset the decision-making process.
6. Rather, it seems the intent of ss 1666 and 1667 was that the review by the Tribunal would proceed on the amended legislative provisions including the additional ground.
7. Having decided the Tribunal's review may have regard to the revised ground in s 920A(1)(d), it remains to be seen whether we should tailor a procedural response - such as ordering a remittal under s 42D of the AAT Act - to ensure the Tribunal meets its own statutory objective in s 2A. That question can be discussed with the parties at a case management directions hearing.
8. The transitional provisions also answer any concern about the exercise of additional powers under s 920B of the Corporations Act on review where those powers were not available to the delegate when she made her decision. We would add the concern in relation to the exercise of additional powers (as opposed to deciding the review on amended grounds) was always less pressing given the observations of Kirby J in Shi (at [60]):

Once it is concluded that the Tribunal is authorised, in a case such as the present, to have regard to new, fresh, additional or different evidence and should make its decision on the basis of current facts and circumstances, it necessarily follows that the Tribunal is able to utilise all of the powers enjoyed by the Authority at the time the Tribunal makes its decision, including powers that may have accrued to the Authority in the interval of time since the original decision was made. So much follows not only from general principles governing the accretion of powers affecting dispositions of bodies such as the Tribunal but also from the power of "substitution" granted by s 43(1)(c)(i) of the AAT Act.

1. ASIC brought this application for an interlocutory hearing to seek guidance about whether the Tribunal considered the old law or the amended provisions would be applied in the course of the review. ASIC was right to do so because the application raises important questions that go to the scope and nature of the Tribunal's review. In particular, one of the grounds ASIC wants us to address on review did not exist at the time of the delegate's decision. That would ordinarily present a problem for reasons identified by the High Court in Shi and Frugtniet. As it happens, we are satisfied there is a legislative fix to the problem. The Tribunal is a creature of a statute and its review is affected by the legislation which confers jurisdiction in each case.
2. We are satisfied the parties should refer to the new law as they prepare their cases for the hearing. We are not satisfied there is any insuperable obstacle to proceeding on that basis although we remain open to any application that might be made in which the parties suggest procedural responses to residual issues that might arise.

I certify that the preceding 46 (forty-six) paragraphs are a true copy of the reasons for the decision herein of The Hon Justice D G Thomas, President and Deputy President Bernard J McCabe

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Australian Securities and Investments Commission

[1] Section 5C of the Corporations Act.