Spent Convictions And Banning Orders: Rudy Frugtniet v ASIC [2019] HCA 16

In Rudy Frugtniet v Australian Securities and Investments Commission [2019] HCA 16 (15 May 2019) the High Court of Australia has, in a unanimous decision, allowed an appeal from a decision of the Full Court of the Federal Court of Australia [see Frugtniet v Australian Securities and Investments Commission [2017] FCAFC 162 (12 October 2017)]. The High Court held that the Administrative Appeals Tribunal ("the Tribunal"), on review of a decision by a delegate of the Australian Securities and Investments Commission ("ASIC") to impose a banning order on the appellant, was prohibited from taking into consideration a spent conviction, within the meaning of Part VIIC of the Crimes Act 1914 (Cth) (the Crimes Act). This was because ASIC had initially been prohibited from taking a spent conviction into account in making its decision to impose the banning order. 

Background 

The appellant, a Sri Lanka national, spent his early years in the United Kingdom and subsequently migrated to Australia in 1990 where he became an Australian citizen. The appellant graduated from Deakin University with a Bachelor of Laws in 2001 and a Master of Laws in 2003. The appellant applied for admission to practice as a barrister and solicitor to the Board of Examiners in Victoria in 2001 and again in 2004 and was unsuccessful. In 2004, the appellant commenced working as a finance broker for Unique Mortgage Services Pty Ltd (“UMS”). The appellant was the sole director and shareholder of UMS, and at different times conducted work, through UMS, as a migration agent, a tax agent and a conveyancing agent.

In November 2010, the appellant lodged an application through UMS for an Australian credit licence with the respondent, ASIC. In that application form the appellant declared that all the information was complete and accurate, including questions about his status as ".a fit and proper person". The credit licence was granted, and came into effect from 24 December 2010.

In the UMS application the appellant did not disclose in that the appellant had a conviction in 1978 for dishonesty offences in the United Kingdom for which he had served two years in prison, and neither did he disclose that he had been found guilty in 1997 of obtaining property by deception by the Broadmeadows Magistrates Court of Victoria (although in that case no conviction was recorded). The appellant claimed that he did not make any false statements in the application, which did not expressly require him to disclose those matters.

The appellant had also been involved in a number of investigations dating from the mid 1990s. These investigations had raised questions about the appellant's conduct in providing information to various licensing and regulatory authorities. In 1999, the appellant had failed to disclose pending charges against him for theft and attempted theft when he applied for registration as a migration agent (charges he was subsequently acquitted of in March 2000) and in 2004, the appellant had conceded that he was unable to satisfy the Victorian Board of Examiners that he met the requirements for admission to legal practice, and that he had failed to make full disclosure under the State legislation.

The Victorian Civil and Administrative Tribunal (VCAT) in April 2011 granted an application by the Law Institute of Victoria to declare the appellant to be a disqualified person under the Legal Profession Act 2004 (Vic), for a period of three years, with the consequence that the appellant's conveyancing licence in Victoria was cancelled by the Business Licensing Authority and his registration as a tax agent was terminated by the Tax Practitioners Board. The appellant's registration as a migration agent was also cancelled.

The ASIC Banning Order

A delegate of the respondent, ASIC, made a permanent banning order against the appellant on 26 June 2014, the order being on the finding that the appellant was not a ". . . fit and proper person" to engage in credit activities pursuant to the National Consumer Credit Protection Act 2009 (Cth) section 80(1)(f) (“the NCCP Act”).

The decision of the delegate was precluded from taking into account spent convictions as defined by section 85ZM(2) of the Crimes Act 1914 (Cth) (‘the Crimes Act’). It was taken as common ground that the appellant’s United Kingdom and Broadmeadows convictions were spent convictions under the Crimes Act section 85ZM(2). Further, Division 3 Part VIIC of the Crimes Act outlines the effect of the right of non-disclosure of spent convictions, subject to the exclusions contained in Division 6, section 85ZW which provides that a Commonwealth or State authority must not take into account a spent conviction when making a decision. Division 6 of Part VIIC contains section 85ZZH(c) which provides that ‘Division 3 does not apply in relation to "a court or tribunal established under a Commonwealth law, a State law or a Territory law, for the purpose of making a decision, including a decision in relation to sentencing."

The Administrative Appeals Tribunal

The Administrative Appeals Tribunal Act 1975 (Cth) section 43(1) (‘the AAT Act’) provides that the Administrative Appeals Tribunal (‘the Tribunal’) may "exercise all of the powers and discretion conferred upon the original decision-maker." The appellant applied to the Tribunal for a review of the delegate’s decision on 29 July 2014 and the Tribunal affirmed the delegate’s decision to make a permanent banning order against the appellant. In reaching its decision, the Tribunal made reference to the spent convictions [see Frugtniet and Australian Securities and Investments Commission [2015] AATA 128 (6 March 2015)].

Appeal to the Federal Court

The appellant’s appeal to the Federal Court of Australia was dismissed [see Frugtniet v Australian Securities and Investments Commission [2016] FCA 995 (22 August 2016)]. The appellant then appealed to the Full Court of the Federal Court of Australia and that appeal was also dismissed [see Frugtniet v Australian Securities and Investments Commission [2017] FCAFC 162 (12 October 2017)]. The Full Court saying at [195]:

Appeal to the High Court

On 17 August 2018 the appellant appealed to the High Court of Australia and was granted special leave to appeal from that part of the judgment of the Full Court which relates to the spent convictions [see Frugtniet v Australian Securities & Investments Commission [2018] HCATrans 155 (17 August 2018)]. The appellant contends that the Tribunal "stands in the shoes" of the original decision maker, and as the delegate was precluded from taking into account the spent convictions, the Tribunal was similarly precluded from doing so. Further, the appellant contends that not to adopt this approach would produce an anomalous result. 

In response, ASIC argued that the reasoning of the Full Court is correct, and that AAT Act section 43(1) and the Crimes Act section 85ZZH(c) can operate concurrently. The respondent also contends that although the function of the Tribunal is to ". . . stand in the shoes" of the original decision-maker, this does not mean that the decision making power needs to be exercised in the same manner, meaning that the Tribunal is able to take into account information that was not before the original decision maker.

The ground of appeal was:

The respondent filed a section 78B Notice of a constitutional matter asserting that this matter involves or may involve a matter arising under the Constitution or its interpretation. None of the Attorneys-General of the States and Territories has intervened in response to that Notice.

The High Court Decision

In coming to its decision the High Court held that the jurisdiction of the Tribunal on the review of a decision made by the delegate of ASIC under the the NCCP Act section 80 was unaffected by the Crimes Act section 85ZZH(c), except where it was altered by statute, the jurisdiction conferred on the Tribunal was that it is ". . . to stand in the shoes of the decision-maker whose decision is under review so as to determine for itself, on the material before it, the decision which can and should be made in the exercise of the power conferred on the primary decision-maker". At para [53]:

The Tribunal exercises the same power as the primary decision-maker, subject to the same constraints, and a consideration which the primary decision-maker must not take into account must not be taken into account by the Tribunal. At para [54]:

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Rudy Frugtniet v Australian Securities and Investments Commission [2019] HCA 16 (15 May 20190) and the associated High Court Summary and Short Particulars.

Frugtniet v Australian Securities & Investments Commission [2018] HCATrans 155 (17 August 2018)

Frugtniet v Australian Securities and Investments Commission [2017] FCAFC 162 (12 October 2017)

Frugtniet v Australian Securities and Investments Commission [2016] FCA 995 (22 August 2016)

Frugtniet and Australian Securities and Investments Commission [2015] AATA 128 (6 March 2015)