Determination of the appeal
112 It is convenient now to determine the questions of law which remain, taking into account the relevant grounds of appeal and Mr Tarrant's oral and written submissions.
113 Question of law 1: There are several aspects to this matter, none of which discloses any reviewable error on the part of the AAT in our view.
114 As to Mr Tarrant's complaint that the AAT misapplied the test in ASIC v Adler, we consider that it should be rejected for the following reasons. First, although we consider that appropriate caution needs to be exercised in transposing a list of factors which may be relevant to the imposition of a sanction in one statutory context to another different context, we do not consider that the AAT erred in regarding the 12 relevant factors set out in [385] of its reasons for decision as being potentially relevant to the correct and preferable decision as to the length of any banning order (the factors are set out in [46] above).
115 Secondly, as to Mr Tarrant's complaint regarding factor (vii), it is true that the AAT made no finding of dishonesty against him. More significantly, however, it is important to note that the AAT saw this particular Adler factor as relating to the seriousness of a contravention and the reference in the Tribunal's description of factor (vii) to "dishonesty" is given as a non-exhaustive example of such seriousness. There can be no doubt that the AAT concluded that Mr Tarrant's contraventions were serious for reasons which did not depend on any finding of dishonesty on his part. Those reasons are set out in [388] of its reasons for decision. That paragraph includes an express statement that the Tribunal made no findings about dishonesty or fraud beyond those which were necessarily implicit in the Tribunal's findings relating to the statements in Representations 3 and 5 that were made to TFC's staff and clients. That is a reference to the AAT's finding that Mr Tarrant was aware from October 2008 that Tarrants Finance was receiving a marketing allowance, that he was aware that the statements in Representations 3 and 5 would be passed on to TFC's clients and that investors would rely on what they were told about TFC not receiving payments or benefits from product providers. In our view, all those findings were open to be made by the AAT, as was its conclusion that the contraventions that it found were serious, not the least because of the pattern of conduct which was involved in many of the contraventions. And in [387], the AAT also expressly stated that there was no evidence of dishonesty. There is no reason to doubt the accuracy of these statements by the AAT.
116 Thirdly, we do not consider that the position is altered by the AAT's reference, also in [387], that "there is evidence of incompetence and negligent, if not wilful, breach". The "wilfulness" referred to there related to the AAT's findings regarding Mr Tarrant's knowledge and state of mind concerning receipt of the marketing allowance from October 2008 and the statements in Representations 3 and 5 which would be made to TFC's clients and the reliance they would place on them, as referred to in the immediately preceding paragraph.
117 Fourthly, we do not accept Mr Tarrant's contention that the AAT erred by taking into account specific deterrence as referred to in factors (vi), (viii) and (xii). The AAT observed in [388] that while it had concerns that Mr Tarrant would not comply with financial services laws in the future, it expressly added that it made no findings about those concerns. Again, there is no reason to doubt the accuracy of that disavowal. The concerns there referred to are presumably those which appear in [387], where reference is made to the absence of any contrition or remorse by Mr Tarrant for the wrongdoing and to the absence of any evidence that Mr Tarrant understood the problems and would reform. In our view, specific deterrence is a relevant factor in determining whether or not to impose a ban and, if so, for how long. The AAT's stated concerns were relevant to that matter, even if the concerns fell short of a specific finding that Mr Tarrant would not comply with financial services laws in the future.
118 In considering the need for a penalty to reflect specific deterrence, a decision-maker is entitled to have regard, as the AAT did here, to the absence of insight by the person to be punished as to the wrongfulness or error of his or her past conduct in order to deter him or her from engaging in that conduct again, regardless of making any assessment of whether he or she would be able to appreciate, when the penalty is imposed, why the conduct was wrong or erroneous. Specific deterrence can be achieved by imposing a penalty that tells the person how the decision-maker has evaluated the conduct complained of so that the person penalised will understand that a repetition of such conduct will be punished no less severely in the future.
119 Fifthly, we do not consider that the AAT fell into reviewable error in finding that "Mr Tarrant has not expressed any contrition or remorse for the wrongdoing and has sought to blame others for the losses". In particular, his complaint of procedural unfairness in respect of this matter must be rejected. He was put on clear notice from 16 November 2012 that ASIC was claiming before the AAT that his lack of remorse was relevant to the question of sanction. Paragraph (d) of ASIC's amended SOFAC said:
The lack of insight and remorse displayed by Mr Tarrant as to the likely effect of and consequences of his conduct whether such conduct was in his capacity as authorised representative or as representative of TFC was a relevant consideration.
120 Mr Tarrant's related complaint that the AAT erred by not taking into account his statements of remorse in his 600 page closing written submission should also be rejected. It might be noted that only selected extracts from that lengthy submission were adduced in evidence before us. Even if those submissions contained statements of remorse as claimed by Mr Tarrant, it was open to the AAT to give them no weight as they were not evidence and no opportunity was provided to have them tested by cross-examining Mr Tarrant.
121 Questions of law 2 and 3: As noted above, both those questions raise the issue whether the AAT erred by not applying the Briginshaw standard. There are several reasons why these complaints must be rejected. First, there is Full Court authority that there is no general principle of law to the effect that the Briginshaw applies to the AAT (see Sullivan at [98]-[122] per Flick and Perry JJ). Mr Tarrant did not submit that this decision was plainly wrong and we consider it should be followed and applied here.
122 Secondly, and in any event, we consider that the AAT did carefully weigh all the evidence and took into account the seriousness of the claims made against Mr Tarrant, and it was fully aware of the serious implications for him of its adverse findings. In [387] of its reasons for decision, the AAT made express reference to the fact that Mr Tarrant would continue to suffer hardship if a banning order was imposed, in circumstances where he had already served two years of the banning order under review and had no history of breach.
123 Thirdly, and in any event, in our view, all the findings of fact and inferences which are particularised in the grounds of the notice of appeal relating to questions of law 2 and 3 were open to be made by the AAT having regard to all of the evidence before it. It is desirable that we say something more about ground 2(g) in particular, in light of the emphasis placed upon it by Mr Tarrant in his oral submissions. This ground alleges that the Tribunal failed to apply the Briginshaw standard in relation to its alleged "finding" in [242] that ASF was a high risk product. Mr Tarrant asserted that that alleged finding was unsupported by the evidence. Mr Tarrant contended that, in making this alleged finding, the AAT ignored evidence and submissions before it which were to the effect that ASF's investments involved fixed interest returns and could not therefore be described as "high risk". As is noted in [243] of the AAT's reasons for decision, Mr Tarrant contended that ASF was not a high risk product.
124 The fundamental difficulty with this aspect of Mr Tarrant's appeal is that the AAT made no finding that ASF was in fact a high risk product. The Tribunal's reference in [242] to ASF being a "high risk product" was not a finding by the AAT to that effect as alleged by Mr Tarrant, but rather was a summary of ASIC's contention to the AAT on that issue. The AAT's relevant finding on the issue is to be found in [358] of its reasons for decision, where the Tribunal expressly stated that it "does not expect that ASF would have been identified as a 'high risk' investment at the time Mr Tarrant caused ASF to be placed on the TFC approved product list and recommended ASF to TFC clients" (emphasis added). The AAT added that it found "persuasive" Mr Tarrant's submission that it was unreasonable to make an assessment of ASF with the benefit of hindsight. The AAT then proceeded in [359] to explain why it considered that a prudent advisor should have been aware of ASF's "limitations" as an investment product, including the risk to capital it presented and why it was unsuitable as a significant investment for the eight particular clients. None of these matters was inconsistent with the AAT's rejection of ASIC's submission that ASF was "high risk". Mr Tarrant's case in respect of this aspect of his appeal is unsustainable. The same reasoning applies in relation to ground 10(g) of the amended notice of appeal, in which a similar complaint is made.
125 Question of law 4: As noted above, we do not consider that this question truly presents a question of law as it relates to the issue of whether the AAT gave proper weight to Mr Richard's evidence, which is a question of fact and a matter for the AAT.
126 Questions of law 5, 6 and 7: It is convenient to deal with these matters together. The substance of Mr Tarrant's complaint is that the AAT considered and made findings in relation to the issue whether he had contravened s 945A(1)(a) of the Corporations Act in circumstances where no allegation was made against him on that matter, so as to give rise to procedural unfairness.
127 We consider that these complaints must also be rejected, for similar reasoning as given above in respect of question of law 1.
128 Questions of law 8, 9 and 10: It is also convenient to deal with these questions together as they all relate to the conduct of the AAT proceedings and their impact upon Mr Tarrant arising from the AAT's decision to grant leave to ASIC to amend its SOFAC on the fifth day of the appeal hearing and its rejection of Mr Tarrant's several adjournment applications.
129 As to the first of those matters, it is evident that, although ASIC did not file Mr Alafaci's expert report until 25 August 2012 (in circumstances where ASIC had requested Mr Alafaci to provide a report as far back at 17 April 2012), there was a further delay until 18 October 2012, when ASIC filed its SOFAC. That was only two days before the hearing was scheduled to commence. It is also clear from that document that ASIC was raising new allegations against Mr Tarrant which had not previously been relied upon by ASIC's delegate in the primary decision. It is hardly surprising, therefore, that Mr Tarrant's counsel sought an adjournment because he (Mr Tarrant) was caught by surprise. Equally unsurprisingly because of its own conduct and responsibility for that state of affairs, ASIC consented to an adjournment. The AAT directed ASIC to file and serve an amended SOFAC, any further evidence and expert reports. Although the AAT was understandably critical of ASIC's conduct, we can discern no reviewable error in its rulings relating to the amendments made by ASIC to its case.
130 As to the AAT's rejection of Mr Tarrant's various adjournment applications, at the heart of Mr Tarrant's complaint is the fact that the AAT did not have before it evidence which he would have wished to tender had his adjournment applications been granted. That contention must fail if the AAT correctly rejected his applications. Mr Tarrant argued that the AAT would have been able to draw inferences from the material provided by him in his unsworn statements, had they remained in evidence.
131 Mr Tarrant continued to receive a transcript of the proceedings before the AAT as it became available while the hearing progressed and he was aware of the fact that the AAT had rejected his unsigned and unsworn statements. That is evident from his email dated 15 August 2013 to the President's associate. It is also plain from that email that Mr Tarrant was aware that the proceedings could continue in his absence. Notwithstanding that Mr Tarrant was aware of the AAT's ruling in respect of the inadmissibility of his unsworn statements and the reasons for rejecting them, he chose not to sign the statements or to seek to re-tender them. Instead he chose to rely on his lengthy post-hearing written submissions and extra material which he provided after 15 August 2013.
132 The issue whether or not the AAT erred in refusing to grant an adjournment turns on whether Mr Tarrant can demonstrate that the AAT's discretion miscarried in law. We acknowledge that there were other courses of action open to the AAT in the circumstances, including that the psychologist and dermatologist could have given evidence and been cross-examined by telephone, which would have avoided the need and expense involved in Mr Tarrant having those professional, and no doubt busy, witnesses travel from Wollongong to Sydney to give evidence at short notice. However, Mr Tarrant made no attempt to suggest to or persuade the AAT that it should adopt this course. Having regard to the reasons given by the AAT, both orally and in its final statement of reasons, for refusing Mr Tarrant's three requests for an adjournment, we can discern no legal error in the AAT's decisions such as would amount to procedural unfairness or any other appealable error for the purposes of s 44 of the AAT Act.
133 We do not accept that the Tribunal's reasons for rejecting the three adjournment requests, as summarised above, were legally inadequate. On the contrary, in our view, those reasons which were delivered both ex tempore and in the AAT's final reasons for decision, amply explain why the AAT refused the requests in the exercise of its discretion to do so. We are not persuaded that Mr Tarrant has established any appealable error in the AAT's rulings or related reasons for those discretionary decisions.
134 Questions of law 11 and 12: We have determined that these questions do not properly raise a question of law, except for question of law 11(i) which relates to the claim that the AAT failed to have regard to the future impact on and consequences of the banning order on Mr Tarrant. This contention is unsustainable having regard to the contents of [387] of the AAT's reasons for decision, which make express reference to the hardship which Mr Tarrant would continue to suffer if a banning order was imposed, in circumstances where he had already been subject to a ban for a period of two years pursuant to the delegate's decision and he had no prior history of breach. The AAT also noted in that paragraph that TFC had been licensed, without incident, from 1999 and that Mr Tarrant had managed and controlled its affairs at all relevant times. The matter about which Mr Tarrant now complains plainly was taken into account by the AAT.
135 Questions of law 13 and 14: It is convenient to deal with these questions together. Both involve claims of procedural unfairness in the AAT's conduct of the proceedings.
136 We did not consider that there is substance in Mr Tarrant's complaint that the AAT unduly interfered in the conduct of the proceedings. The matters of which he complains are properly to be regarded as the AAT appropriately questioning the material and evidence which was placed before it. In our view, it was plainly entitled to do so, particularly having regard to its inquisitorial function.
137 We also consider that the AAT was entitled to ask its own questions of witnesses with a view to seeking to clarify and confirm their evidence. Significantly, the AAT allowed counsel to ask witnesses further questions if they so wished after the AAT's own questioning of particular witnesses.
138 As to the claims of apprehended bias, we consider that they also should be rejected. The relevant principles in ascertaining whether an apprehension of bias has arisen in a judicial process are set out in Ebner. However, as Gleeson CJ, Gaudron and Gummow JJ explained in Re Refugee Review Tribunal; Ex parte H [2001] HCA 28; (2001) 179 ALR 425 at 426-427 [5], and 434-435 [27]-[29], the principles, when applied outside the judicial system, must take account of the nature of the body or tribunal whose decision is in issue and the different character of the proceedings. Here, however, nothing turns on this difference.
139 The fundamental question is whether a fair-minded and informed lay observer might reasonably apprehend that the AAT might not bring an impartial mind to the resolution of Mr Tarrant's application for review of ASIC's decision because of some disqualifying factor. Mr Tarrant alleged that a disqualifying factor here was the President's association with the Australian Labor Party and his past role as a Minister in an earlier Labor Government. Mr Tarrant also relied on a letter written by Mr Stephen Jones MP, the Federal Member for Throsby, to the Chair of the Senate Economic References Committee which appeared to have been dated shortly prior to publication of the AAT's reasons for decision in which there was an erroneous reference to the Federal Court having banned Mr Tarrant for seven years. Mr Tarrant appeared to suggest that the press release was evidence of some association between Mr Jones and the President of the AAT. Any such suggestion is entirely without evidence and we reject it.
140 At the time that the letter was dated, Mr Tarrant's seven year ban imposed by ASIC had been publicly known for about two years and the AAT had reserved its decision on his application for review of that ban. There is no evidence as to how Mr Jones came to refer erroneously to the Federal Court in his letter and there is no reasonable basis on which a fair-minded, informed, lay observer might draw an inference that the President had had some secret communication with Mr Jones or anyone else (see also Eastman v Duggan [2013] ACTSC 111 at [51]-[53] per Rares J).
141 In Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488 at 493 [12]-[13], Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ explained that the test postulated by the law for apprehended bias in the judicial system was what the hypothetical reasonable, or fair-minded, observer of a judge's conduct might reasonably apprehend. Their Honours explained that that test was objective and founded on the need for public confidence in the judiciary, and was not simply based on the assessment by some judges of the capacity or performance of their colleagues. They said:
At the same time, two things need to be remembered: the observer is taken to be reasonable; and the person being observed is "a professional judge whose training, tradition and oath of affirmation require [the judge] to discard the irrelevant, the immaterial and the prejudicial" [Vakauta v Kelly (1988) 13 NSWLR 502 at 527, per McHugh JA, adopted in Vakauta v Kelly (1989) 167 CLR 568 at 584-585, per Toohey J].
142 Their Honours said that the hypothetical observer is not assumed to have detailed knowledge of the law or the character or ability of the particular judge. The reasonableness of any suggested apprehension of bias must be considered in the context of ordinary judicial practice.
143 Underlying the importance of the appearance of the independence and impartiality of the judiciary is the fundamental notion that our society expects judges and the work they do in their official capacities to be the product of fair, impartial decision-making according to law. The principle that a judge who is actually, or apparently, biased should not decide a matter is one of the fundamental principles of natural justice or procedural fairness.
144 Here, in our opinion, a fair-minded lay observer, acting reasonably with knowledge that the President was a professional judge (s 7(1) of the AAT Act prohibits the appointment of any person as the President of the AAT unless he or she is a Judge of the Federal Court) with the characteristics that we have identified in [141] above, could not form the view that he had had some secret, or any, communication with Mr Jones or anyone else as to the length, if any, of a banning order on which the AAT had reserved its decision or on anything concerned with that reserved decision. Such an observer would have rejected, as being speculative and baseless, any apprehension of the kind for which Mr Tarrant argued, that the President might be biased solely on the basis of Mr Jones' letter's erroneous reference to the Federal Court.
145 In our view, these matters fall well short of meeting the requisite test which is to be viewed through the eyes of the hypothetical bystander. If the position had been different, the Court may have had to grapple with the difficult question of the application of the doctrine of apprehended bias to a multi-member decision-maker (as to which see, for example, the different views expressed on that matter in McGovern v Ku-ring-gai Council [2008] NSWCA 209; (2008) 72 NSWLR 504).
146 Nor do we consider that there is any substance in Mr Tarrant's claim that the AAT gave preferential treatment to ASIC which gave rise to apprehended bias. As ASIC pointed out, the AAT rejected various applications, evidence and arguments advanced by ASIC, including:
(a) ASIC's application that the substantive application for review of the delegate's decision be dismissed pursuant to s 42A(5) of the AAT Act;
(b) ASIC's application to limit the scope of the review pursuant to s 25(4A) of the AAT Act;
(c) ASIC's application to have Mr Woods' affidavit excluded;
(d) the AAT placed no weight on the evidence of Mr Brown, who was called by ASIC;
(e) the AAT did not accept ASIC's case, relying in part on Mr Richard's evidence, as to the time at which the marketing allowance was agreed; and
(f) the AAT was not satisfied that Representations 1, 2 and 4 advanced by ASIC were misleading or deceptive.
147 It is evident that the AAT ruled in Mr Tarrant's favour on certain matters and in favour of ASIC on other matters. In our view, the relevant question, viewed through the eyes of the fair-minded lay observer, acting reasonably, is not how many of the AAT's rulings or comments were critical of Mr Tarrant as compared with the number of those which were adverse to ASIC. Rather, the relevant question is whether the fair-minded lay observer, acting reasonably, might possibly apprehend that the AAT might not have brought an impartial mind to the making of the decision on its review because it had not adequately explained its particular rulings and findings which impacted upon either or both Mr Tarrant and ASIC. In our view, there is no basis in the AAT's reasons for its decision on which the fair-minded lay observer, acting reasonably, could possibly have formed such an apprehension: cf SZJSS at 178 [41]-[44]. We reject Mr Tarrant's submission that ASIC received preferential treatment which was indicative of apprehended bias.