Australia – “Spent Convictions” Can’t Be Considered By ASIC Or AAT When Making Banning Order.

 

What you need to know

 

• The High Court overturned an Administrative Appeals Tribunal decision banning a finance broker with a colourful criminal history because it took that history into account. The AAT will now reconsider the banning order.
• This was because ASIC – and therefore the AAT – is prohibited from taking into account a person's "spent convictions" when considering banning a person from engaging in credit activities. 
• This decision reinforces that the function of an administrative tribunal on a merits review is to stand in the shoes of the primary decision-maker and exercise the same powers and be subject to the same constraints. Any alteration to the nature of an administrative review can only be done through a clearly expressed contrary statute.

 

Background

 

Frugtniet v Australian Securities and Investments Commission [2019] HCA 16

 

A former finance broker had a criminal record including "spent convictions" of forgery, handling stolen goods and obtaining property by deception. A conviction is "spent" if the person was pardoned or not sentenced to imprisonment for more than 30 months and the "waiting period" (which is usually 10 years) has ended. This is designed to allow people to "live down" certain convictions.

 

ASIC made a banning order against the broker (under the National Consumer Credit Protection Act) on the basis that it had reason to believe that he was not a fit and proper person to engage in credit activities. It did so without considering his "spent convictions" – as it was prohibited from doing so (by the NCCP Act in conjunction with the Crimes Act 1914 (Cth)). 

 

The broker applied to the AAT for review of ASIC's decision. The AAT affirmed ASIC's banning order on the basis that it had reason to believe that the broker was not a fit and proper person, although the AAT did take the spent convictions into account on the basis that they were "evidence of dishonest conduct that [was] relevant under the policy guidelines". 

 

The AAT considered it could take the spent convictions it into account even though ASIC couldn't, on the basis of an exception in the prohibition provisions in relation to tribunals established under Commonwealth Law. Both the Federal and Full Federal Courts agreed with the AAT.

 

High Court: spent convictions can't be considered

 

The High Court considered that, except where altered by some other statute (which had not occurred in this situation), the jurisdiction conferred on the AAT is to stand in the shoes of the decision-maker whose decision is under review in order to determine what decision should be made in the exercise of the powers conferred on the original decision maker. The Court held that the AAT exercises the same powers as the original decision-maker and is subject to the same constraints, including the considerations that could be taken into account.

 

The result was that the AAT's decision was overturned, although the matter was handed back to the AAT for it to reconsider the banning order without taking the spent convictions into account.