Stiles v Commissioner for Fair Trading & Anor

Background

1. Section 14(b) of the Act requires the administrator to refer any application that [administrator] considers to have been duly made (along with any supporting information) to the Commissioner for an investigation and determination as to either or both of the following: (i) whether the applicant is a fit and proper person to be granted the licence, (ii) whether it would be contrary to the public interest for the licence to be granted.
2. The Commissioner undertook an investigation of the appellant's application and had regard to confidential criminal intelligence information held by the Police Force. The Commissioner issued an adverse security determination, which made negative findings in respect on both of the above grounds (fitness, public interest). The administrator is bound by an adverse security determination, and proceeded to refuse the application: TP Act, s 16(3)(c).
3. The Tribunal disagreed with the Commissioner in relation to ground (i) (fitness). In particular, the Tribunal did not accept the Commissioner's case as to the honesty and integrity of the applicant. It disagreed with him that her failure to provide in her application two surnames that she had used earlier in her life involved deliberate deceit. The names were her first married surname and her maiden surname. The Tribunal did, however, agree with the Commissioner's view that she had no practical experience in the operation of a tattoo parlour business or similar activities, and accepted that that factor cast doubt on her fitness to be granted a business licence of the present kind. Nonetheless it did not go so far as to find her to be a person who was not fit and proper to be granted such a licence.
4. The Tribunal agreed with the Commissioner in relation to ground (ii) (the public interest).
5. The Tribunal's reasons included closed paragraphs where it had regard to confidential, criminal intelligence information relied upon by the Commissioner, and presented in closed session.
6. The result is that the appellant is hampered to a significant degree in bringing an appeal. The considerations of most weight to the Commissioner, or to the Tribunal on review, may be concealed.
7. What is known to the appellant from the open parts of the Commissioner's determination and the open parts of the Tribunal's reasons is that there is concern over her personal links to a member or members of a club that is commonly described as an OMCG, the Rebels, and the potential for them to have a role in the proposed business.
8. The key issue is the connection that the appellant has with a Mr Steve Istvan Istitoris. She is related to him by marriage. Mr Institoris and her daughter, Shannon, were de facto partners for many years, and there is a son of the relationship, now 18.
9. At the time the TP Act came into force (1 October 2013) Mr Institoris ran four tattoo parlours, employing 15 tattooists. The four businesses included one, also called 'Inkhouse', conducted at the premises the subject of the present application.
10. After the TP Act came into force, Mr Institoris proceeded to apply for an for each of his businesses. In October 2014, the Commissioner issued an adverse security determination, with the result that the administrator refused the applications, thereby forcing Mr Institoris out of the tattoo industry.
11. Mr Institoris applied to the Tribunal for review of the administrator's decision, and sought a stay of its operation pending disposal of the review application. The Tribunal refused the application: Institoris v Commissioner for Fair Trading & Anor [2014] NSWCATAD 219 (21 October 2014). The Tribunal's open reasons include the following paragraphs: 34. The Commissioner submitted that it would be contrary to the public interest for a licence to be granted to the Applicant for the reasons that he is a member of the Rebels. The Commissioner contends that OMCGS, including the Rebels, pose a significant criminal threat to the community and public safety. In particular, OMCGs have a proven propensity for extreme violence in support of their interests. It is submitted that there is a public interest in removing criminal elements from the tattoo industry and thereby protecting other operators or employees in the tattoo industry. The Commissioner further contends that there is a public interest in ensuring public confidence in the standards of this newly regulated industry. The involvement of OMCGs in the tattoo industry brings it into disrepute and lessens public confidence in it. 38. The Applicant has been operating tattoo parlours for many years. Under the new legislative scheme he now requires a licence. The Commissioner has refused his application for a licence based, to some extent, on criminal intelligence information. That information has not been disclosed to the Applicant. 39. Based on all the evidence, I am satisfied that it is contrary to the public interest for the Applicant to be permitted to continue operating his business between now and the date on which the Tribunal determines his application. 41. The Applicant has a strong financial and personal interest in continuing to operate his business. However, in my view there is significant risk to the public interest in the short term if he is permitted to continue trading.
12. We have noted above the nature of the personal association between the appellant and Mr Institoris. In addition, the appellant's daughter, Shannon, had been the lessee of the premises during the time Mr Institoris conducted business there. Shannon has since renewed the lease of the premises, and is the current lessee of the premises.
13. The Tribunal's open reasons note the closeness of the appellant's association with a Mr Institoris. They also refer to her evidence that her first husband, Mr Morgan, was for some years a member of the Rebels.
14. The Tribunal's reasons gave weight to the appellant's lack of knowledge of the industry, her lack of experience in the industry, her lack of general managerial experience and her lack of a detailed understanding of such matters as the conditions of the lease, and the likely income and outgoings of the business. The Tribunal found that it is 'likely she would be exposed to pressure [in the conduct of the business], and, given her inexperience, it is unclear how she would cope with that pressure': [71].
15. In addition, the Tribunal's reasons include numerous confidential, closed paragraphs, i.e. [41]-[46]; [48]-[50]; [62]-[64];[73]; [75].

The Appeal

1. In her Notice of Appeal filed 15 March 2016 the appellant sought orders setting aside the Tribunal's decision, and orders granting the licence; and an order for the costs of the appeal.
2. Under the Civil and Administrative Tribunal Act 2013, s 80(2)(b) an appeal may be made against a Tribunal decision of the present kind in relation to 'any question of law', and may, with the permission of the Appeal Panel, be made 'on any other grounds'.
3. The Notice sought permission to extend the appeal to 'other grounds', ie. grounds other than questions of law, and gave reasons.
4. The Notice specified two Grounds. The Notice indicated a copy of the transcript of the first instance hearing had been ordered, and the Grounds might be amended once a transcript of the proceedings had been obtained.
5. At the appeal hearing the appellant was represented by Mr L Robison, of counsel. The Appeal Panel had before it written submissions from both parties. Dr C Mantziaris, of counsel, appeared for the respondents.
6. Ultimately, the appellant pressed five Grounds. They are set out in the appellant's submissions, filed 23 November 2016. Ground 2, as it appeared in the original Notice of Appeal was not pressed. The Grounds are as follows (we have retained the numbering used in the submissions): 1. The Tribunal erred in finding it not in the public interest that the appellant should be granted an operator's licence in circumstances where the appellant was found to be a 'fit and proper person' on the same evidence before the Tribunal. 3. The Tribunal applied the wrong test in determining the public interest question. 4. The Tribunal violated the 'no evidence' rule. 5. The Tribunal failed to give adequate reasons for its decision. 6. The Tribunal's decision was illogical.
7. Grounds 3 to 6 are formulated as questions of law. It is clear law that use of a wrong test in the construction and application of a statutory discretion is an error of law, as is the making findings of fact on the basis of no evidence or exercising adversely an administrative discretion without any factual foundation, as is a failure by the Tribunal to give adequate reasons for its decision, or the making by the Tribunal of an administrative decision that is illogical. See generally House v R [1936] HCA 40; (1936) 55 CLR 499, at 503 per Starke J and at 504-5 per Dixon, Evatt and McTiernan JJ; and in relation specifically to illogicality, Minister for Immigration and Citizenship v SZMDS [2010] HCA 16 per Crennan and Bell JJ at [121]ff.
8. It is less apparent from its formulation whether Ground 1 (carried over from the original Notice of Appeal) raises any question of law. This difficulty is, we think, recognised in the appellant's submissions. The submissions state that if Grounds 3 or 4 are made out, then it follows that Ground 1 is made out. Nonetheless, we will start with Ground 1.
9. Ground 1 The relationship between statutory provisions which give a decision maker a power to decided based on either or both fitness and the public interest was considered by the Appeal Panel of the Administrative Decisions Tribunal (ADT) in an early case in that Tribunal: Commissioner of Police v Toleafoa [1999] NSWADTAP 9. The case concerned the operation of the security industry licensing scheme administered by the Commissioner for Police. The Appeal Panel said: 25 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. As the possibility of refusing an application on the ground of character is dealt with elsewhere in the same section, it is reasonable to infer that the Parliament intended that the public interest discretion operate in areas to which the character ground was not relevant or, possibly, in circumstances where an objection on character grounds would not be sufficient in its own right to warrant refusal. The appellant [i.e. the Commissioner for Police] appears to have adopted a similar view in formulating its reasons. Its argument, in effect, is that if its objections fail on character grounds, the matters as to character combined with the nature of the activity proposed to be engaged in are, at least in the case of the Class 1C licence application, sufficient to justify refusal in the public interest.
10. In our view the analysis in Toleafoa holds true for tattoo parlour industry licensing.
11. In reaching its conclusion as to fitness, the Tribunal had regard to the following matters. The appellant is now aged in her early 60s and semi-retired. She had a long and stable career in the mail-house industry. She provided testimonials from friends as to her good character. She now holds a number of part-time appointments providing administrative services to local community organisations, such as minute-taking. She is also a volunteer at a family support service and a school canteen, such as minute-taking. The Tribunal accepted this evidence.
12. Importantly, and this was the crux of the Commissioner's opinion that she was not a fit and proper applicant, the Tribunal did not accept that her failure to include her previous surnames at the relevant point of the online application amounted to deliberate, deceitful conduct.
13. The Tribunal therefore reached the conclusion, on balance, that an adverse finding as to her fitness and character was not justified.
14. (We add, in that regard, that the police use of the term 'aliases' to describe the appellant's previous surnames was inappropriate. In our view, in ordinary usage in the community, the term 'alias' carries the connotation that the name to which it refers is not the current usual name of the person, but one used deceitfully to avoid detection or to trick people. We accept that sometimes the term 'alias' is used in a more anodyne way, to mean no more than 'also known as'. In the present case - and we think, understandably - the appellant considered that the term 'alias' was used in a way that cast a slur on her. It would be fairer to applicants if the term 'alias' was avoided in cases of the present type where the surname changes accorded with naming customs widely adopted by women. The online application procedure uses, we note, neutral terms to refer to prior names, not the term 'alias'.)
15. We agree with the submission for the Commissioner that a finding that a person is not of fit and proper character to hold the type of licence under notice would necessarily also mean that it would be contrary to the public interest to allow the person to hold the licence.
16. Equally there can be cases, and this is an example of that kind, where the material might be problematic in relation to the question of fitness but strong in relation to the public interest. A person may not be so lacking in fitness as to warrant the conclusion that her or she is not a fit and proper person to hold the relevant licence. But nonetheless there may be matters in the material considered in that regard that properly found a case for denial of the licence in the public interest. There is no problem, as we see it, in an administrator (or the review tribunal) differentiating in that way.
17. It does not follow that because a person is 'fit' to hold a licence, that therefore it must also be in public interest for the person to hold the licence. The 'public interest' enables a range of factors some of which may be specific to the person (personal associations, health considerations, and so on) and others of which may be external to the person (need for more licences in a particular geographical area, number of licences already held, risks of penetration by criminal elements, and so on) that might militate against grant of a licence.
18. Ground 1 is dismissed.
19. Ground 3 The submission is that the Tribunal misunderstood the meaning to be given to the 'public interest' in this scheme of decision-making.
20. The first sentence of para [25] in Toleafoa, set out above, deals with the width of the expression 'public interest'. The sentence has frequently been cited in decisions of the ADT and this Tribunal.
21. It draws on the following passage from the decision in O'Sullivan v Farrer [1989] HCA 61; 168 CLR 210 at 216 where the High Court stated: [T]he expression 'in the public interest', when used in a statute, classically imports a discretionary value judgment to be made by reference to undefined factual matters, confined only 'in so far as the subject matter and the scope and purpose of the statutory enactments may enable ... given reasons to be [pronounced] definitely extraneous to any objects the legislature could have had in view'. (citation omitted)
22. See more recently to the same effect, The Pilbara Infrastructure Pty Ltd v Australian Competition Tribunal [2012] HCA 36; 246 CLR 379 (French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ) at [42]
23. In State licensing statutes it is common for the administrator to be given power to refuse, suspend or revoke a licence because the applicant or licensee is not a person of fit and proper character, or because it is in the 'public interest'.
24. In our view, there is no substance to the submission that the Tribunal misapplied the public interest test.
25. The Tribunal looked in the open parts of its decision, as we have explained, at a range of factors that might, we think, reasonably bear on the public interest in this area of regulation. Clearly a key concern of the Parliament was the connection between the tattoo parlour industry as it has grown up in Australia and the activities of OMCGs. The Commissioner's open material and the Tribunal's open reasons identified a risk of involvement by at least one member of an OMCG (Mr Institoris) in the operation of the proposed business. The Tribunal saw this is a likely possibility because of the appellant's lack of industry experience, and limited understanding of the practicalities of managing such a business and the like. She might therefore turn to others in her immediate circle with relevant knowledge and experience. These are clearly factors relevant to the public interest. There is nothing in the closed paragraphs of the reasons, which we have reviewed, that would cause us to doubt this conclusion.
26. Ground 3 is dismissed.
27. Ground 4 As the appellant's submissions state, the making of a finding of fact for which there is no evidence involves an error of law. There are many authorities for that proposition, including the cases cited by the appellant, Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 355, 365 and 387; and Ceric v Prosegur Australia Pty Ltd [2016] FCA 1068 at [63]. The submissions did not refer us to any specific findings of fact by the Tribunal for which it was said there was no evidence.
28. The Tribunal in its reasons was careful to confine its factual summary to matters conceded by the appellant in evidence. Necessarily in an area of regulation of the present kind there is a speculative quality.
29. The statutory scheme recognises criminal intelligence information as relevant to the exercise of the administrative discretion conferred on the administrator. Implicitly, the scheme recognises that this information will often be of a hearsay, speculative and subjective character. The information is not of a kind that would pass the standards that courts apply to the identification of relevant evidence, and the making of findings of fact. The administrator (and the Tribunal on review) is called on to give the weight considered appropriate to criminal intelligence information as part of its deliberations. It is not making findings of fact in the classical sense, it is treating the intelligence information as a relevant consideration. In doing that, it is expected to bring a critical mind to bear on the information relied upon, and make an assessment on its apparent strength and plausibility.
30. In its open reasons the Tribunal expressed concern over such matters as the degree of her family connections to people involved with the Rebels. The Tribunal accepted police information in relation to the involvement of Rebels members in illegal activity in Australia.
31. Ground 4 is dismissed.
32. Ground 5 Clearly the tribunal is obliged to give adequate reasons for its decision. The relevant law requires the Tribunal to expose the critical steps in its reasoning and the material upon which it has relied: Absolon v NSW TAFE [1999] NSWCA 311 at [66]; Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110; AVS Group Australia Pty Ltd v Commissioner of Police (No 2) [2014] NSWCATAP 53.'
33. The objection is that the Tribunal failed adequately to explain its case in relation to the public interest.
34. Because of the suppression of several paragraphs of the reasons, the appellant can only go so far in making its cases as to the inadequacy of the reasons. It may that when the open reasons and the closed reasons are considered as a whole a different picture will emerge as to their adequacy.
35. This is one of the difficulties presented by cases of this sort, where so much of the critical information in the mind of the decision-maker is hidden from the view of the affected person, not able to be tested by that person or by someone on their behalf (such as a special advocate) and involves intelligence information with all the weaknesses that may apply to information of that kind.
36. In our view the open reasons, viewed in isolation, did meet the law's requirements as to adequacy. The Tribunal pointed to the factors in the application that made it problematic from a public interest viewpoint. We have examined the additional matters dealt with in the closed reasons. There is nothing in the closed reasons which affects our conclusion that the reasons were adequate.
37. Ground 6 In the main majority judgment in SZMDS, Crennan and Bell JJ said: 135. ... Whilst there may be varieties of illogicality and irrationality, a decision will not be illogical or irrational if there is room for a logical or rational person to reach the same decision on the material before the decision maker. A decision might be said to be illogical or irrational if only one conclusion is open on the evidence, and the decision maker does not come to that conclusion, or if the decision to which the decision maker came was simply not open on the evidence or if there is no logical connection between the evidence and the inferences or conclusions drawn. ...
38. The appellant refers to an apparent tension between two passages in the open reasons. In its conclusions on the public interest issue, the Tribunal said: 67 The second ground on which the Commissioner relies is that it is not in the public interest for the Applicant to hold the licence. I agree with the Commissioner in this regard. 68 In my view, there is a real risk of association, either directly or indirectly, between the Applicant and Mr Institoris in relation to the conduct of a tattoo business at the premises. There is clearly a link between the Applicant and her daughter, Ms Timms, and there is clearly a link between Ms Timms and Mr Institoris. There is clearly a link between Ms Timms and Mr Institoris and the premises.
39. One of the Commissioner's arguments was that the appellant should be barred from holding a licence on the ground that a 'close associate' might be involved in the conduct of the business, and he had not been disclosed (Mr Institoris). Earlier in its reasons, at [23] ff the Tribunal explained the issue, and set out the definition in s 4 of the TP Act: (1) For the purposes of this Act, a person is a close associate of an applicant for a licence or a licensee if the person: (a) holds or will hold any relevant financial interest, or is or will be entitled to exercise any relevant power (whether in the person's own right or on behalf of any other person), in the business of the applicant or licensee that is or will be carried on under the authority of the licence, and by virtue of that interest or power is or will be able (in the opinion of the Commissioner) to exercise a significant influence over or with respect to the management or operation of that business, or (b) holds or will hold any relevant position, whether in the person's own right or on behalf of any other person, in the business of the applicant or licensee that is or will be carried on under the authority of the licence, or (c) is or will be engaged as a contractor or employed in the business of the applicant or licensee that is or will be carried on under the authority of the licence.
40. In this instance the submission was that Mr Institoris fell within category (a).
41. The Tribunal concluded: 65 As noted above, the Commissioner asserted that Mr Institoris is a close associate of the Applicant. However, there is no evidence to support that contention in regard to the role that Mr Institoris would play in the business. In my view it is merely speculation that he would attempt to assert pressure on the Applicant. 66 In the circumstances I am not satisfied that Mr Institoris is a close associate of the Applicant.
42. The appellant contends that there is a contradiction with what is said at [67]-[68], amounting to an illogicality that renders the Tribunal's decision void.
43. When the two passages are presented in this way in isolation from totality of the Tribunal's reasons, it may seem that that two conclusions are inconsistent.
44. When the reasons are read as a whole, however, it is clear that the Tribunal was dealing at [65]-[66] with an issue of statutory construction, namely whether the evidence warranted a finding that Mr Institoris fell within s 4(1). It was going no further than that. It was not essential to the resolution of this case that it form a final view on the Commissioner's opinion that Mr Institutoris was, under the law, a 'close associate'. Its conclusion was unsurprising. (Had it actively pursued that question, it may well have needed to give notice to Mr Institoris and join him to the proceedings.)
45. In paras [67]-[68] the Tribunal is focussing on the circumstances of the appellant. It is expressing concern over the possibility that the appellant will allow herself to be influenced inappropriately in the management of the business because of her (long) personal association via her daughter and her grandson with Mr Institoris. It is using the word 'association' in a broader and more flexible way than the way the word, 'associate', is used in s 4.
46. There is no inconsistency that raises the issue of illogicality.
47. The submissions did not press any application for the extension of the appeal on any further grounds.

Order Appeal dismissed. 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: 27 February 2017