INTERIM ADVANCE  CORPORATION PTY LTD and COMMISSIONER FOR CONSUMER PROTECTION [2008] WASAT 81 (15 April 2008)

Last Updated: 18 April 2008

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM : COMMERCIAL & CIVIL

ACT : CREDIT (ADMINISTRATION) ACT 1984 (WA)

CITATION :  INTERIM ADVANCE  CORPORATION PTY LTD and COMMISSIONER FOR CONSUMER PROTECTION [2008] WASAT 81

MEMBER : MR T CAREY (MEMBER)

MR A MACRI (SESSIONAL MEMBER)

MR J R COLLEY (SENIOR SESSIONAL MEMBER)

HEARD : 13 FEBRUARY 2008

DELIVERED : 15 APRIL 2008

FILE NO/S : CC 1732 of 2007

BETWEEN :  INTERIM ADVANCE  CORPORATION PTY LTD (ACN 094 743 843)

Applicant

AND

COMMISSIONER FOR CONSUMER PROTECTION

Respondent

Catchwords:
Credit provider's licence - Decision to refuse licence - Fit and proper person test - Whether regard can be had to findings in reasons for decision relating to spent conviction - Adverse findings by magistrate on credibility of applicant's director - Findings and penalties imposed by Finance Brokers Supervisory Board in relation to dealings as finance broker - Findings by judge in respect of unlicensed debt collection charges - Aggregation of matters

Legislation:
Credit (Administration) Act 1984 (WA), s 12(4)(h)
Debt Collectors Licensing Act 1964 (WA)
Interpretation Act 1984 (WA), s 18
Spent Convictions Act 1998 (WA), s 3(1), s 7(1), s 14, s 22, s 25, s 26, s 27, s 28, Pt 2

Result:
Application refused
Respondent's decision affirmed

Category: B

Representation:

Counsel:

Applicant : EM Corboy SC

Respondent : L Black & S Dworcan

Solicitors:

Applicant : Talbot & Olivier

Respondent : Sean Dworcan

Case(s) referred to in decision(s):

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

1 The applicant was refused a credit provider's licence under the Credit (Administration) Act 1984 (WA) on the ground that its director was regarded as not being a fit and proper person to be the holder of such a licence if he were applying for it.

2 The applicant sought review of the respondent's decision on the basis that its director was fit and proper. It provided responses to each of the matters relied upon by the respondent in arriving at the opposite conclusion.

3 The Tribunal considered each of the matters upon which the respondent continued to rely. They included the findings of a magistrate going to the credit of the director, findings and penalties arising from two inquiries by the former Finance Brokers Supervisory Board into the director's activities as a finance broker, and findings of a Supreme Court Judge concerning charges against the applicant and its director of unlicensed debt collecting. The respondent no longer relied, or relied to any great extent, upon some other matters, including convictions against the applicant's director which had recently become spent convictions.

4 A preliminary issue for determination was whether the consequence of a conviction becoming spent was that no regard could be had to the magistrate's findings on credit in the reasons for decision in support of a now spent conviction, as distinct from the conviction itself and the charge to which it related. The Tribunal found that such findings could be referred to.

5 On its consideration of all the remaining matters, individually and in aggregate, the Tribunal concluded that the applicant's director would not be a fit and proper person to be the holder of a credit provider's licence if he were applying, and that the refusal to grant a licence to the applicant should be affirmed.

Factual background

6  Interim Advance  Corporation Pty Ltd (applicant) seeks review of the decision of the Commissioner for Consumer Protection (Commissioner) by letter dated 5 October 2007 to refuse its application for a credit provider's licence pursuant to the Credit (Administration) Act 1984 (WA) (C(A) Act). The refusal decision was made on the ground specified in s 12(4)(h) of the C(A) Act, namely, that it appeared to the Commissioner that:

"A director of, or a person concerned in the management of, the body corporate is not of good reputation or character or in any other way would not be a fit and proper person to be the holder of a licence if the director or person were to apply for the licence personally."

7 The relevant director in this case is Oliver George Douglas (Mr Douglas).

8 As made clear by the statement of reasons in the decision letter, and also the written and oral submissions made in the proceedings, reliance has been placed by the Commissioner upon a number of discrete matters concerning Mr Douglas:

1. Findings made by Mr Reynolds SM in 1995 in a prosecution against Mr Douglas which resulted in one of the convictions now spent;
2. Mr Douglas' 1998 assault conviction (other convictions relied upon at the time of the decision are no longer relied upon as they have since become spent);

100. Adverse findings against Mr Douglas of the Finance Brokers' Supervisory Board in its inquiries into the finance broking industry in 1998 and 2002;

4. Comments made by Mr Cockram SM in a Local Court proceeding in 2004;
5. An allegedly false statement of Mr Douglas in an affidavit filed in another Local Court action in 2004; and
6. Findings made by Hasluck J in a Supreme Court appeal in 2007.

9 At the hearing, counsel for the Commissioner, Ms Black, allocated priority to the various matters in terms of their significance to the issue of Mr Douglas' repute, character, fitness and propriety to hold a credit provider's licence if he were to apply personally. We indicate the priority given the various matters, and deal with them in accordance with that priority, later in these reasons. Ms Black said that the Commissioner did not place the significance that it originally had on the false affidavit matter, as it now accepted that any inaccuracy in the content of the affidavit was not a deliberate act, although maintaining that Mr Douglas should have taken more care in ensuring the accuracy of the affidavit. Similarly, the comments of Magistrate Cockram were also downgraded in importance to the extent that their primary significance would appear to be as the repository for a particular finding of Magistrate Reynolds which continues to be relied upon.

10 As to that finding, and other findings or observations of the same magistrate, the applicant disputed the ability of the Tribunal to have any regard to them, on that basis that they were part of the reasons for a conviction which has, since 19 November 2007, been spent in accordance with the Spent Convictions Act 1998 (WA) (SC Act). The Commissioner acknowledged that, as was the case with a number of other spent convictions, neither the conviction pronounced by Magistrate Reynolds, nor the charge to which it related, could be relied upon, but maintained that the prohibition did not extend to the Magistrate's findings going to Mr Douglas' truthfulness as a witness. Following a discussion as to whether the first part of the hearing should be devoted to determining the admissibility of the Magistrate's findings as a preliminary issue, the Tribunal ruled that the parties should make their submissions on the point as part of their cases over all. For the purposes of these reasons however, it is necessary for us to determine whether reliance can be placed on the Magistrate's findings first before going on to deal with the balance of the issues raised.

Can the Tribunal have regard to findings by the Magistrate prior to conviction where the conviction is now spent?

11 It was common cause that the conviction in question became spent upon the making of an application to the Commissioner of Police and that Commissioner issuing to the applicant a certificate that the conviction is spent, as provided by s 7(1) of the SC Act (the conviction being a "lesser conviction" for the purposes of that provision).

12 The following sections of the SC Act are potentially relevant to the question to be determined.

13 Section 22 provides:

"It is unlawful for an authority that is empowered to confer, renew, extend, revoke or withdraw an authorisation or qualification that is needed for or facilitates the practice of a profession, the carrying on of a trade or the engaging in of an occupation to discriminate against a person on the ground of a spent conviction of the person -

(a) by refusing or failing to confer, renew or extend the authorisation or qualification;

(b) in the terms or conditions on which it is prepared to confer the authorisation or qualification or to renew or extend the authorisation or qualification; or

(c) by revoking or withdrawing the authorisation or qualification or varying the terms or conditions upon which it is held."

14 Section 25 provides:

A reference in a written law of this State (other than this Act) to a conviction of a person for an offence does not include a reference to a spent conviction.

15 Section 26 provides:

Where a written law of this State permits or allows a person to consider, take into account, or determine the good character, fitness, propriety or other like attribute of a person for the purposes of that written law, the person shall not in doing so have regard to a spent conviction or the charge to which the conviction relates.

16 Section 27 provides:

Questions about a convicted person put to that person or any other person shall not be taken to relate to a spent conviction or the charge to which the conviction relates.

17 Section 28 provides:

A person shall not, without lawful reason, obtain information about a spent conviction, or the charge to which the conviction relates, from an official criminal record.

Penalty: $1 000.

In subsection (1) 'official criminal record' means a record containing information about the results of criminal proceedings kept for the purposes of its functions by any police force, court, government department, local or other public authority in Western Australia."

18 The following definition appears in s 3(1):

"'conviction' means a conviction incurred by a natural person for an offence against the law of this State or of a foreign country;"

19 Finally, s 14 provides:

Nothing in Division 4 affects -

(a) the procedure of, or evidence admissible in, proceedings of a court or tribunal that applies the laws of evidence or proceedings under section 6; or

(b) the Commissioner of Police acting under section 7.

Without limiting subsection (1) -

(a) sections 25(2), 26(1) and 27 do not apply in proceedings of a court or tribunal referred to in subsection (1)(a) or proceedings under section 6;

(b) section 25(1) does not apply in a court or tribunal for the purpose of -

(i) the determination of the guilt or innocence of a person charged with an offence where a conviction is relevant to that determination; or

(ii) a determination of the appropriate punishment to be imposed by that court or tribunal for an offence.

A court, tribunal or judge that receives evidence of a spent conviction shall take such steps as are reasonably available to avoid or minimise publication of that evidence."

20 Counsel for the applicant, Mr EM Corboy SC, submitted that, consistent with s 18 of the Interpretation Act 1984 (WA), an interpretation of the prohibitions applying to spent convictions in the SC Act which promoted the purpose underlying that Act ought be preferred. Mr Corboy submitted that the purpose of the SC Act is to promote the rehabilitation of convicted offenders where their convictions become dated and, as such, is beneficial legislation which is not to be undermined by adopting a narrow interpretation. The object, it was contended, was to permit offenders to "wipe the slate clean" of the stain of convictions after the required time had elapsed. Therefore, the references in s 22 of the SC Act to "a spent conviction" and in s 26(1) of the SC Act to "the spent conviction or the charge to which it relates" must be taken to include any findings of the judicial officer dealing with the charge prior to conviction. This would entail the factual circumstances of the offence, and also any findings regarding the credibility of the accused person made and recorded by the judge or magistrate hearing the charges.

21 Mr Corboy submitted that there were two reasons why regard could not be had to such findings in the case of a spent conviction. First, to the extent that they are recorded in a transcript of (in this case) the Magistrate's reasons, the transcript constitutes an "official criminal record". Recourse to such a record for the purpose of obtaining information of a spent conviction is proscribed by s 28 of the SC Act.

22 The second basis upon which it was argued that regard cannot be had to the findings is concerned with the applicant's arguments regarding the purpose of the legislation, the nub of which was that an interpretation of the SC Act that permitted a person to have regard to findings made in connection with a spent conviction would be inconsistent with the purpose of the legislation. Mr Corboy further submitted that it will often be the case that adverse findings on credit will sway magistrates in making particular factual findings and that unreliability of evidence given will "merge" into the facts on which the conviction is based. Looked at in this way, it is artificial, it was said, to divorce findings on credit from findings on fact. In addition, it could not, according to the applicant, have been intended that for less serious criminal offences, regard could be had to findings going to the evidence of an accused person by a magistrate simply because the findings are recorded in his or her reasons for decision, when no such recourse would be possible in the case of more serious criminal offences heard by a jury.

23 Having given careful consideration to the issue, we do not accept the submissions on behalf of the applicant. It seems to us that the words used by Parliament should, consistent with the evident purpose of the SC Act, be given their natural meaning, so that it is the "spent conviction" and "the charge to which the conviction relates" to which the various prohibitions apply. When one considers the provisions concerning the exercise of discretions to confer or otherwise deal with vocational licences (namely, s 22 and s 26), there is no basis, in our view, for expanding the language used. Although we acknowledge the force of the applicant's argument that the ultimate finding of guilt is often the result of the sifting of evidence and preferring the evidence of one or more witnesses to that of the accused, we do not regard the sections referred to as providing a warrant for any and all conduct by the accused at his trial, no matter how relevant, to be disregarded when the person's suitability as a licence holder is being considered. As occurred in the case in question, that conduct might be some years after the facts giving rise to the laying of a charge which results in a conviction. Consider the following extreme example: An accused person, A, facing charges under the corporations legislation physically attacks the counsel who had just completed his cross­examination of the accused in the courtroom. The magistrate, who was a witness to the attack, makes comment about it in his reasons for deciding the charges are proved. The comments are to the effect that the attack demonstrated a serious flaw in A's character which supported the magistrate in not accepting A's evidence on critical facts, although it was not essential to his findings in that regard. The counsel who was assaulted does not press charges and none is laid. Some years later, by which time he has secured a spent conviction certificate in respect of the corporations convictions, A seeks a vocational licence. If the applicant's arguments are correct, the licensing authority would not be entitled to have regard to the attack on the counsel (as distinct from the convictions and the charges which led to them) by reason of the prohibitions in the SC Act. In our view, that cannot have been the intention of the legislature, even given the undoubted beneficial nature of the legislation.

24 In our view, the "perverse result" of which Mr Corboy spoke - that a magistrate's reasons leading to a conviction which is subsequently spent can be referred to, which would not be so in the case of a more serious crime, where the findings of juries are not published - does not have regard to the differences in the regimes which appear in Pt 2 of the SC Act for lesser and more serious offences. For example, the right to a spent conviction will usually be automatic in the case of a lesser conviction once the prescribed period has elapsed, whereas in the case of serious offences, application must be made to a judge who has a discretion. To the extent that the result is perverse however, we think that is a matter for the legislature, particularly where a similarly perverse result (being that alluded to in the previous paragraph) might ensue if the contrary view of the construction of the prohibitions is accepted.

25 We accept that there might be cases where an adverse credibility finding is so intrinsic to an ultimate finding of guilt that to disclose it would give rise to a serious risk that the conviction itself or charge to which it relates (which in their terms are the subject of the prohibitions) will be disclosed. In those circumstances, the licensing authority would be well advised to exercise caution before having regard to it. We do not believe that the remarks of the Magistrate which are relied upon in this case are of that character.

26 Finally, we reject the applicant's argument that the contents of the transcript of Magistrate Reynolds' reasons cannot be referred to because the document is an "official criminal record". We have doubts as to whether the transcript is such a record, although both parties proceeded on the assumption it was. The definition of the expression requires that the record be "kept for the purposes of its functions by any police force, court, government department, local or other public authority in Western Australia". There was no evidence going to the source of the record, nor whether it was kept by any of the instrumentalities referred to, nor that it was kept for the purposes of such an instrumentality's functions. We did not find it necessary to reach a finding on this issue however, because the Magistrate's findings are not "information about a spent conviction (nor) the charge to which the conviction relates", given that those words cannot be read in the expanded way urged upon us by the applicant, for the reasons we have previously given. There is no reason, whether arising from s 28 of the SC Act or otherwise, why the findings cannot be referred to.

27 We mention, for the sake of completeness, that in light of our conclusions regarding the construction of the sections of the SC Act to which we have referred, it is not necessary for us to deal with the Commissioner's suggestion that s 14 of the SC Act may provide a "complete answer" to the prohibitions applying.

28 Before turning to the various matters upon which the Commissioner relies in asserting that Mr Douglas is not of good reputation or character, or otherwise is not a fit and proper person for the relevant purpose, we shall make reference to the principles which must guide us in our consideration.

Fit and proper person - general principles

29 The applicable principles were not the subject of dispute between the parties, although they placed differing emphasis on particular aspects. They are disclosed by reference to the following judicial pronouncements.

30 In Hughes & Vale Pty Ltd v State of New South Wales (No 2) [1955] HCA 28; (1955) 93 CLR 127 at 156, Dixon CJ, McTiernan J and Webb J said:

"The expression 'fit and proper person' is of course familiar enough as traditional words when used with reference to offices and perhaps vocations. But their very purpose is to give the widest scope for judgment and indeed for rejection. 'Fit' (or 'idoneus') with respect to an office is said to involve three things, honesty knowledge and ability: 'honesty to execute it truly, without malice affection or partiality; knowledge to know what he ought duly to do; and ability as well in estate as in body, that he may intend and execute his office, when need is, diligently, and not for impotency or poverty neglect it."

31 The significance of past conduct in the fit and proper context was the subject of the following observation by Latham CJ in Re Davis [1947] HCA 53; (1947) 75 CLR 409 (Re Davis) at 416:

"In determining this question immediately recent and more distant behaviour may be taken into account. It is not possible to draw a line at some point of time and to prevent the Court from looking behind that line ... When a considerable period of time has elapsed past facts should be considered in the light of the lapse of time, and weight should be given to the subsequent behaviour of the person concerned."

32 The expression "fit and proper" is to be interpreted in the light of the subject matter of the Act in which the expression appears: Maxwell v Dixon [1965] WAR 167 at 169. It is thus necessary to assess whether the characteristics of honesty, knowledge and ability are present in the context of the vocation for which the licence is sought. Or, as stated by Walters J in Sobey v Commercial and Private Agents Board (1979) 22 SASR 20 (Sobey) at 76, in reference to the use of "fit and proper person" dealing with commercial and private agents:

"... an applicant must show not only that he is possessed of a requisite knowledge of the duties and responsibilities devolving upon him as the holder of a particular licence under the Act, but also that he is possessed of sufficient moral integrity and rectitude of character as to permit him to be safely accredited to the public, without further inquiry, as a person to be entrusted with the sort of work which the licence entails."

Is Mr Douglas a fit and proper person?

33 We set out earlier in these reasons in chronological order, the matters upon which the Commissioner relies in asserting a negative answer to the question posed by the heading. We will deal with the matters in the order of the priority afforded them by the Commissioner's counsel. That order, which was descending in importance, was:

1. the findings of Mr Reynolds SM;
2. the findings and penalties of the Finance Brokers Supervisory Board in its two inquiries;
3. the findings of Hasluck J; and
4. the remaining matters.

34 We will deal with each by considering initially its pertinent facts and the contentions of the parties relating to it. Then, under the heading "Our reasoning", we will set out our findings and conclusions in relation to each matter individually, before doing so based on an accumulation of all the matters.

i) Findings of Mr Reynolds SM

35 We are mindful, in making reference to the relevant findings, that we are prohibited from doing so in such a way which might reveal the nature of any relevant conviction or charge. We are also mindful of the submission of the applicant's counsel that it is difficult, if not impossible, to undertake a proper assessment of an adverse credibility finding without referring to the particular controversy in issue - in this case, the question of Mr Douglas' innocence or guilt of a particular charge. However, it cannot be doubted that Mr Douglas' credentials as an honest person - whether he is possessed of "sufficient moral integrity and rectitude of character" for the purpose identified in Sobey - are crucial for the application to succeed. We intend to take account of any relevant matter put to us on that subject, whilst avoiding any pitfalls which might arise as a result of the limitations imposed by the SC Act.

36 The decision in question was delivered on 9 January 1995. There are four findings upon which reliance is placed. They overlap to some degree.

37 We concur with the applicant's submission most recently referred to the extent that some little context or background in which the relevant findings were made is required to enable any sensible analysis. Part of the context to which we consider we are able to refer is that the matter before Magistrate Reynolds concerned events of a commercial/corporate character involving Mr Douglas, who gave evidence in relation to them.

38 The first finding appeared on page 103 of exhibit 1.9 (being part of the respondent's book of documents) at [6]. The finding is:

"I find the defendant to be a most unreliable witness ... I strongly and totally reject his evidence on the existence of such an indemnity. It is nothing but a recent invention on his part."

39 The evidence referred to in this passage was that Mr Douglas had spoken with a Mr Yap by telephone and sought and obtained an indemnity by a company controlled by Mr Yap in respect of liabilities arising from a particular remittance.

40 The second finding is on page 104 of exhibit 1.9 at [8]. The finding is:

"I strongly reject this evidence of the defendant."

41 The evidence in question concerned advice that Mr Douglas said he received from a Mr Logaraj, Mr Yap's solicitor and Mr Douglas' former co-director of one of the parties involved, as to the purpose to which the funds remitted were to be put.

42 The third finding, which appears on page 105 of exhibit 1.9 at [9], is in the following terms:

"I strongly reject this evidence in its entirety."

43 The evidence to which this finding related concerned the ability of Mr Douglas and his co-directors to make decisions independently of Mr Yap.

44 The fourth finding is on page 106 of exhibit 1.9 at [11] and was:

"I do not accept that that was his genuine belief as at 7 September, 1988."

45 The relevant expression of belief by Mr Douglas concerned particular characteristics of Messrs Yap and Logaraj.

46 A fifth and final finding relied upon was a sentencing remark of Magistrate Reynolds, which was recorded in the decision of Magistrate Cockram to which reference has been made. The finding is encapsulated in the following excerpt, appearing on page 148 of exhibit 1.12:

"... for the purpose of sentence it seems to me that it can't be said that you have shown any remorse in respect of this particular matter. The reason I say that is obvious and that is that you have invented evidence that is clearly designed to exculpate you from the offence and so that, in my view, exhibits little remorse."

47 According to the Commissioner, the findings are highly significant. They are in strong language, going further than the usual process of distinguishing one witness's evidence from another's. They are, it was said, highly significant to the question of whether Mr Douglas is a fit and proper person as exposing a lack of credibility and a failure to comply with regulatory obligations.

48 The applicant made the following submissions:

1. The findings were made in 1995, in respect of offences dating back to 1988.
2. The findings, or some of them, were given without any reasons. They are therefore difficult to assess, particularly as no regard may be had to any conviction nor the charge to which a conviction relates.

100. Although it was conceded that an adverse finding on credit is a serious matter, the position of Mr Douglas might be compared with that of legal practitioners, who are under a duty to the Court to practise "utmost" honesty. Legal practitioners who have been convicted of dishonesty have nevertheless been admitted to legal practice, indicating that they will not be forever disbarred on the basis of a dishonesty finding. Mr Douglas was not convicted nor the subject of any proven charge in respect of any offence involving dishonesty subsequent to the findings of Magistrate Reynolds.

4. The findings are the subject of views expressed by Mr Douglas. They were of the character of credit findings made regularly by the Court in arriving at its decisions. Mr Douglas was not referred to the Attorney General for consideration to be given to a perjury charge.

ii) Findings and penalties of the Finance Brokers Supervisory Board

A) Findings following on from Inquiry No 2 of 1998

49 In 1998, Mr Douglas was the subject of an inquiry by the then Finance Brokers Supervisory Board (Board). The allegations against him were:

1. that he negotiated a loan prior to being granted a business certificate under the Finance Broking legislation (he had been granted a licence under that legislation);
2. that the loan arranged was contrary to the provisions appearing on Mr Douglas' business certificate.

50 The report of the Board, containing its reasons for decision in the matter of Mr Douglas, is exhibit 1.10. The first allegation was proven, and a penalty of a suspension for seven months and seven days imposed. The second allegation was not proven as the loan transaction "had been all but completed" by the time Mr Douglas was issued with his business certificate, although there was a finding that the source of funds in respect of the loan was not a licensed credit provider, and therefore there would have been a breach of the conditions of a business certificate had one existed.

51 The Commissioner placed "considerable weight" on these findings of the Board, and argued that the penalty reflected the Board's view as to the seriousness of the conduct. It was said that the conduct reflected an inability to comply with regulatory statutes regarding the provision of finance.

52 The applicant submitted:

1. The issue of a business certificate was largely a merely administrative procedure. Mr Douglas had obtained his licence on 3 February 1988. The business certificate had been applied for on 7 September 1995 and was granted on 11 October 1995. The loan in question was finalised on 20 October 1995. Steps were taken to arrange the loan prior to 11 October 1995. The loan was arranged with people sharing the same office as Mr Douglas.
2. Again to compare the situation of a legal practitioner, a temporary failure to obtain a practising certificate and continuing to practise as a lawyer would not be sufficient to have the practitioner struck off. Equally, even though the seven month suspension was a harsh penalty, the Board did not see fit to revoke Mr Douglas' finance broking licence.

B) Findings following on from Inquiry No 2 of 2002

53 In 2002, Mr Douglas was the subject of a further inquiry by the Board. There were 10 allegations against Mr Douglas, of which two were proven. Those allegations were:

1. (Referred to as Allegation 8) - Mr Douglas engaged in harsh and unconscionable conduct in failing to forward a sum of $2,500 to a former client and retaining the money on account of administration or interest charges.
2. (Referred to as Allegation 9) - Mr Douglas failed to comply with the condition on his (then current) business certificate not to negotiate loan moneys with an unlicensed credit provider.

54 The Commissioner placed "some weight" on the two allegations which were upheld, which it again regarded as displaying an unwillingness or inability to comply with requirements for the provision of finance, whether imposed by statute or the applicable business certificate. A particular finding of the Board in respect of Allegation 8 was said to be of concern as giving rise to increased vulnerability on the part of Mr Douglas' clients.

55 The applicant made the following submissions:

1. Eight of the 10 allegations against Mr Douglas were dismissed. The complaints which were not upheld consisted of serious allegations.
2. The Board's key finding regarding Allegation 8 was of a failure to obtain proper documentation and specifically transparent communication. The characterisation of the conduct as "harsh or unconscionable" was therefore an odd one.

100. The penalty of $600, which applied to both allegations, does not indicate a serious level of wrongdoing.

4. Allegation 9 was a technical matter concerning the proscription of the sourcing of finance by a restricted licence broker (which Mr Douglas was) from anyone other than a licensed credit provider, in respect of two conjunctional arrangements. There appeared to be controversy in the finance broking industry at the time regarding the extent of the prohibition in the conjunctional transaction context.

iii) The findings of Hasluck J

56 The proceeding before His Honour was an appeal from a decision of a magistrate to acquit the applicant and Mr Douglas of charges under the Debt Collectors Licensing Act 1964 (WA) for unlicensed debt collecting. The respondents to the appeal, by a notice of contention, contended that the Magistrate's verdict should be affirmed on additional grounds, including that the defence of honest claim of right was established. In essence, the defence of honest claim of right arises where conduct occurs on the basis of an honest but mistaken belief that the defendant was entitled to so act.

57 The appeal was upheld and the matter remitted to the Magistrate for further hearing - see Fazio v  Interim Advance  Corporation Pty Ltd [2007] WASC 108, which is exhibit 1.17.

58 Justice Hasluck gave consideration of the defence raised on Mr Douglas' behalf (at pages 220 and following of exhibit 1.17). His Honour concluded (page 220 of exhibit 1.17 at [121]) that he was not satisfied that Mr Douglas had discharged the burden that lay upon him of proving that the offence was committed without knowledge or that he used all due diligence to prevent commission of the offence.

59 In the applicant's statement of issues, facts and contentions in this proceeding, Mr Douglas' belief as to the applicant's rights the subject of the appeal was said to be grounded in his understanding of the effect of a power of attorney clause contained in a franchise agreement which clause was explained to him by his and the applicant's previous solicitors who prepared the franchise agreement.

60 Justice Hasluck had taken evidence from Mr Douglas on the issue in relation to which, as His Honour said, the burden lay upon him. We will not here descend to the particulars of that evidence, but merely indicate that we have had regard to His Honour's "general observations" about it appearing at [97] ­ [110]. His Honour made the following findings at [111] and [112]:

"In my view, it follows from this review of the franchise agreement and related evidence that the subject matter of the recovery action reflected in the Clark summons was a debt due to Aussie Cash Northam. Quite clearly, the recovery of the debt depended on action being taken by  Interim Advance  in response to a request for action by Aussie Cash Northam. The objective was to apply pressure to the debtor with a view to obtaining payment of an amount outstanding. The steps taken might be confined to a letter of demand but could, and in the Clark case in fact did, extend to the preparation and issuing of a summons. It can be inferred from the terms of the summons and nature of the collection process that the expectation of the parties was that payment of the amount claimed in the summons would be made to  Interim Advance  and distributed by the franchisor to the franchisees, after deduction of the  Interim Advance  entitlement.
I consider that activities of this kind clearly fall within that part of the definition of the term 'debt collector' which refers to collecting, requesting or demanding payment of debts on behalf of any other person."

61 Justice Hasluck concluded at [122]:

"It follows from my general observations concerning the cl 10.1 Power of Attorney provision that Mr Douglas had a scant factual basis for contending that  Interim Advance  had taken an assignment of the subject debts or was a holder in due course of the same. A finding can be made, and should be made, in my view, that, notwithstanding the form of the Clark and other summonses in which  Interim Advance  was described as the creditor, at all material times Mr Douglas knew that the function being performed was the collection of a debt belonging to a third party franchisee, namely, Aussie Cash Northam, at the request of the franchisee, in the expectation of gain."

62 And at [123]:

"Moreover, when I review the facts of the matter bearing upon this issue, I consider that I am also entitled to give weight to the observations and findings of the Magistrate, who had the advantage of seeing the witnesses. His Honour observed that the subject business was a small office and Mr Douglas knew exactly what was going on. To my mind, the uncorroborated evidence of Mr Douglas that he had received legal advice about this matter, and believed he was proceeding lawfully, is outweighed by the other matters I have mentioned."

63 The Commissioner submitted that these findings about relatively recent conduct bear on Mr Douglas' ability to comprehend and comply with regulatory statutes. According to the Commissioner, engaging in unlicensed debt collection is highly relevant to the question to be determined in this application.

64 Initially, the applicant sought to place a limited status upon the findings of Hasluck J, as being ones which were not binding on the Magistrate and which were also the subject of an appeal in respect of which leave has been granted. Counsel for the applicant retreated from this position later in the hearing and accepted that the Magistrate was bound to adopt His Honour's findings, particularly in relation to the defence of honest claim of right. There was also acceptance on behalf of the applicant that this Tribunal was entitled to rely on the decision, whilst noting that the findings were the subject of the appeal.

65 Although the applicant's statement of issues, facts and contentions included submissions that the findings do not bear upon the issue of whether Mr Douglas is a fit and proper person to hold a credit provider's licence as they do not relate to the duties performed by credit providers, and do not bear upon Mr Douglas' ability to comprehend and comply with regulatory statutes, these were not arguments which received any emphasis at the hearing. What Mr Corboy did say is that the circumstances of Mr Douglas' conduct needed to be considered, including evidence he gave that he acted on legal advice received to the effect that he was entitled to do as he did. That indicated, it was submitted, that there was no contumelious disregard of the regulatory provisions.

iv) Remaining matters

66 These were described by the Commissioner's counsel as "part of the circumstantial case". The first matter was Mr Douglas' conviction in 1988 for assault, for which he received a $100 fine. Little weight was attached to any of Mr Douglas' convictions during that period, which applies to his assault conviction.

67 As we have already indicated, Ms Black did continue to rely upon the matter of the alleged false statement by Mr Douglas filed in a Local Court proceeding in 2004, but accepted that it was not a deliberate falsification.

68 We can indicate immediately that we do not regard either of these matters as being significant for the purpose of assessing the central issue of Mr Douglas' suitability as a credit provider if he were making application for a licence on his own behalf, by reason of a combination of its age and limited degree of the wrongdoing involved, if any.

69 We will now set out our reasoning in relation to each of the remaining matters relied upon.

Our reasoning

i) Findings of Mr Reynolds SM

70 The findings were serious. They consisted of the Magistrate rejecting Mr Douglas' evidence on four discrete matters or events and a fifth finding of a lack of remorse based on Mr Douglas' invention of evidence designed to exculpate him from an offence. We can and do agree with the Commissioner that the findings did go further than the usual process of sifting through the evidence of different witnesses. They exposed a lack of credibility on Mr Douglas' part, at least as at 1995, which must weigh against him in assessing his credentials as a fit and proper person. Subject to the question of timing, to which we will return, the lack of credibility thus exposed is a significant factor. We cannot however agree with the Commissioner that the findings also expose a failure to comply with regulatory obligations, because the limited information to which we are entitled to have regard does not permit such a conclusion.

71 We turn to the submissions of the applicant regarding Magistrate Reynolds' findings. Those submissions are summarised above at [48] and we deal with each in turn.

Submission (a)

72 We are concerned solely with the subject of the findings, which is the evidence of Mr Douglas before Magistrate Reynolds in about 1995. Although it is true that this is now rather dated, we are mindful of the Latham CJ observation in Re Davis concerning past events. What we draw from that observation is that the lack of credibility exposed by a Magistrate in 1995 is a relevant matter, to be assessed by reference to subsequent events. We will return to this aspect.

Submission (b)

73 Reading the decision of Magistrate Reynolds as a whole, the impression we gain is that his Worship (as he then was) was, by reason of his unfavourable assessment of Mr Douglas' credibility, not prepared to accept his evidence on significant contested matters unless it was corroborated. Moreover, the Magistrate pointed to other facts established by the evidence, including evidence of Mr Douglas, which was inconsistent with what he had said on the contested points. In the Tribunal's experience, and with respect to His Honour, this is not an unusual line of reasoning for a judicial officer to adopt in rejecting a witness' evidence on crucial points. It does not detract from the force of a finding that evidence - the truth, or lack thereof, which is within the province of the witness to know - is in fact untrue.

Submission (c)

74 We might accept that the 1995 findings of a magistrate against Mr Douglas, even of the serious nature and number exhibited in this case, would not be sufficient to sustain a case that Mr Douglas would not, in 2008, be a fit and proper person for the relevant purpose. But the Commissioner does not rely solely on Magistrate Reynolds' findings. We will in due course consider whether any element of dishonesty arises from any of the subsequent matters which are relied upon. It might also be the case that any failings disclosed by the subsequent events might be such that, despite lacking dishonesty as an element, they bear consideration, along with the credibility difficulty which arose previously, relating to the question of a fit and proper person. This aspect will be dealt with when we turn to the aggregation of all matters.

Submission (d)

75 Mr Douglas gave evidence in the form of a statement of evidence - exhibit 4 - supplemented by a short examination in chief, a lengthier cross­examination, and a brief re-examination. Counsel for the applicant referred to his expressing views about the findings. Unfortunately, there was a large discrepancy between his views in his statement and his views on the same subject in his oral evidence.

76 In his statement, Mr Douglas said (references are to paragraph numbers in the statement):

I accepted Mr Reynolds SM's findings that he did not accept my version of events concerning an indemnity which was material in the transaction in question ...

137. I did not, and do not, have any issue with the [sic] Mr Reynolds SM's findings ...
138. Further, I agreed, and agree, that there were fairly strong findings made against me in relation to some of my evidence ..."

77 Under cross­examination, Mr Douglas said that he did not accept the findings, which, if true, meant that he had lied and committed perjury, and sought to reassert the existence of the indemnity which was rejected by the first of the Magistrate's findings.

78 For the purposes of this matter, we prefer Mr Douglas' written evidence to his oral evidence. That is, we accept that he does not seek to dispute Magistrate Reynolds' findings or bring them into question. It appears that Mr Douglas did not appeal against any relevant conviction. In any event, there is no basis upon which we can do so.

79 This leaves the submissions that the findings were of the nature of credit findings made regularly by the courts and that no referral to the Attorney General for consideration of a perjury charge occurred. As we have already indicated, we consider the findings to be stronger than the usual rejection of evidence based on competing credibility judgments. The fact there was no referral to the Attorney General is noted, but it is the inevitable consequence of the acceptance of the Magistrate's findings that Mr Douglas lied under oath or affirmation before his Worship.

ii) Findings and penalties of the Finance Brokers Supervisory Board

A) Findings following on from Inquiry No 2 of 1998

80 We have taken up the suggestion of the parties to read the whole of the Board's report of Inquiry 2 of 1998 (with the exception of three missing pages in exhibit 1.10). Much of the contents is concerned with the evidence of the various players in the relevant loan transaction and who did what in terms of negotiating the loan. In respect of important elements of the transaction, the Board preferred the evidence of other witnesses to that of Mr Douglas and witnesses called on his behalf. In particular, the Board accepted the evidence of a Ms Sims, who was undoubtedly acting for the lenders, over that of Mr Douglas, in circumstances where it acknowledged that it was essential for Mr Douglas' defence to satisfy the Board that Ms Sims was deceitful. The conclusion of the Board, which appears on page 119 of exhibit 1.10, was:

"... the facts themselves indicated that Sims could not have been deemed to be acting on behalf of Abbott and that it was Douglas who was acting on Abbott's behalf. Abbott required a loan and Douglas acted as an agent in the course of business negotiating a loan of money for Abbot which fits the definition of a finance broker according to the provisions of the Act."

81 The allegation which was proved was that Mr Douglas had negotiated a loan prior to being issued a business certificate. Mr Corboy characterised the issue of the business certificate as "largely an administrative procedure", the licence (which Mr Douglas had) apparently being the more important approval document. There is nothing in the relevant legislation which supports such a characterisation. The relevant section at the time of the conduct in question prohibited a person from carrying on business as a finance broker "unless he or it is licensed as such under this Act and holds a current Business Certificate in respect of the licence". Further, as Ms Black noted, the Board's penalty (a suspension of more than seven months) indicated that the Board regarded the contravention as serious. An appeal against the Board's decision, going to both the proving of the allegation and penalty, was lodged with the District Court, and that Court granted a stay of the suspension. The appeal was effectively abandoned in 2003 at a time that Mr Douglas was no longer working as a finance broker. There was a suggestion by the Commissioner that Mr Douglas had manipulated the situation by avoiding the consequences of his suspension for a period without pursuing his appeal, which the applicant denied, but we have found it unnecessary for our purposes to form a view about this.

82 Mr Corboy also referred to the circumstances of the transaction, including that it concerned people occupying the same office as Mr Douglas. As the case which the Board had to consider demonstrates, familiarity with people one is acting for is not a good reason for laxness in terms of the requirements which apply and, presumably, would otherwise be adhered to.

83 As for the applicant's submissions comparing the proven allegation against Mr Douglas in 1998 with a similar finding against a legal practitioner, and that the Board preferred as a penalty suspension to revocation of his licence, it is again the case that in the absence of anything else, the allegation would not be sufficient in 2008 to sustain a finding that Mr Douglas is not a fit and proper person for the relevant purpose. However, there are other matters which need to be considered along with this one.

84 There is, for us, a further aspect of the Board's decision which is of concern. A fair and proper reading of the Board's reasons demonstrates that the Board considered Mr Douglas to adopt tenuous positions in support of his defence predicated upon convoluted or strained explanations of the factual circumstances disclosed by the evidence. The Board was not prepared to accept those explanations, in part because that would have involved rejecting the evidence of a witness whom it basically regarded as a witness of truth. We have formed a view, based on three of the sets of reasons which it has been necessary for us to consider (the reasons of Hasluck J being the third), and also his evidence before us in cross­examination, that Mr Douglas is prepared to resort to untruths when he perceives it to be to his advantage. To that extent, we do not accept Mr Corboy's submission that the 1998 findings of the Board were the last recorded instance of his indulging in conduct involving dishonesty.

85 We note that the Board also found that Mr Douglas had breached the condition of his business certificate that the source of funds in respect of any loan which he negotiated be a licensed credit provider. However, it was unable to find that a breach of the relevant legislation had occurred by reason of the fact that he was not the holder of the certificate when the main part of the loan negotiations occurred. Mr Douglas was not cross­examined as to the state of his knowledge of the conditions of business certificates prior to being issued with his. In these circumstances, we do not consider that any adverse inference arises for our purposes regarding this matter.

B) Findings following on from Inquiry No 2 of 2002

86 The Commissioner placed only "some weight" on the allegations proved by the Board in its 2002 inquiry, compared with the "considerable" weight placed on the Board's 1998 findings. We consider it was proper to do so, both on an analysis of the proven allegations and by a simple comparison of the penalties the Board chose to impart - in the case of the 2002 findings, a global fine of $600. The report of the Board's Inquiry No 2 of 2002 is exhibit 1.11.

87 Dealing with Allegation 8, the monies held back by Mr Douglas were the subject of his claim by way of outstanding interest collection fees and other amounts. The Board said (page 131 of exhibit 1.11 at [47]) that on the face of the document, there appeared to have been an agreement by the borrowers (the Gardiners) to pay the interest collection fees and there did not appear to be any dispute that the other monies were owed. The finding against Mr Douglas appears at page 132 of exhibit 1.11 at [49] in the following terms:

"The Board is conscious that s 48(4) of the Act mandates that 'A finance broker shall pay monies withdrawn from the Trust Account to the person or persons lawfully entitled or authorised to receive them', and that s 48(3) embargoes the withdrawal of interest received on loans otherwise than where a payment is authorised by sub-section (4) or 'As otherwise authorised by the prior written consent of all parties to the loan'. The Respondent did give evidence that he did not have written authority to pay out Trust monies 'for other than the Trust purpose'. However, it is not entirely clear that the signed documentation between the parties did not support the Respondent's transactions on the Trust Account in issue. Nonetheless the Board's view is that in the circumstances there should at least have been transparent communication between the parties prior to any off­set as occurred. Such communication would have made plain the extent of the Gardiners account and the fact that it would nevertheless remain in debit after the off-set. It seems that regular statements were not sent to the Gardiners and certainly none were sent at this time. In all these circumstances, whilst it makes no specific finding of a Trust Account transgression, nevertheless the Board is satisfied that the conduct of the licensee at the time did not meet the standards required under Article 15 of the Code. We are therefore satisfied that the conduct in question (or lack of it) was harsh or unconscionable or both."

88 According to counsel for the Commissioner, the Board's conclusion at [49] reflected badly on Mr Douglas because it demonstrated that through his failure to meet the standard of transparency to which the Board referred, his clients were left in the dark and vulnerable. Counsel for the applicant, on the other hand, focussed upon the identified failure of Mr Douglas to ensure transparent communication by proper documentation.

89 When Mr Douglas was cross­examined on this matter, he agreed with Ms Black that transparency was equally important for credit providers as for finance brokers. His written statement refers to the experience teaching him that in conducting business it is necessary to provide full documentation to the client regarding any deduction of fees from trust accounts and in each case an authority from the client is needed.

90 Turning to allegation 9, the Board rejected an argument by Mr Douglas that he had not acted in breach of his restricted business certificate when he acted on behalf of the borrower in a conjunctional transaction where an unrestricted finance broker acted for the private lender. It did so on the basis of a construction of the condition which seems unexceptionable, even though, according to the evidence of Mr Douglas, conjunctional transactions were commonplace at the time and the Board had not taken any action previously against a restricted licensee in his position. We note in passing that the Board referred to the evidence of a Mr Brunton, previously a member of the Board, to the effect that conjunctional arrangements between restricted and unrestricted finance brokers were not uncommon practice but that, during his period in office, the question of conjunctional dealings was never an issue brought to the Board to debate on. Whether or not Mr Douglas was the first occasion of the Board's enforcement of the prohibition on restricted lenders, we are in no doubt by his acting in the transaction involving an unlicensed private lender, he contravened the condition on his business certificate. Mr Douglas appeared to accept this when, in his written statement, he said that Allegation 9 had taught him that conjunctional arrangements between a licensed finance broker and a restricted finance broker are not permitted, albeit omitting the necessary reference to the source of funds being an unlicensed lender.

91 We note that the allegations related to a transaction occurring in 1997, some 11 years ago. They related to Mr Douglas' then occupation as a finance broker and are technical in nature. We accept the force of the Commissioner's submission, however, that both industries require strict technical compliance with the various statutes, regulations and conditions applicable to practice within the industry. We also agree with its assessment that "some weight" must attach to the two proven allegations.

iii) The findings of Hasluck J

92 We accept the Commissioner's submission that His Honour's findings, relating to relatively recent conduct, do not reflect well on Mr Douglas' ability to comprehend and comply with regulatory statutes. Somewhat alarmingly, the findings once again indicate Mr Douglas' involvement in conduct concerning the provision of credit without proper authorisation. As for the comparison of the statutory schemes applying to debt collectors and credit providers, we need go no further than refer to Mr Douglas' acceptance under cross­examination that similar requirements apply to both.

93 Although His Honour's decision is the subject of appeal, this Tribunal must, standing in the shoes of the Commissioner, take heed of Hasluck J's findings and comments. One would have thought that a person in Mr Douglas' position, with his past experience of scrutiny from vocational regulatory bodies, would have been particularly alert to the need to act strictly in compliance with the legal requirements when it came to questions of capacity to act. Of all the matters upon which the Commissioner relies, we consider that, as the position currently stands, the findings of Hasluck J represent the most damning instance of Mr Douglas' failure in that regard. Naturally, in the event that the appeal is successful, the opportunity for re-appraisal of the observations we have just made may present itself.

94 Again, in our view, a fair reading of His Honour's reasons discloses that Hasluck J was less than impressed with some of the arguments advanced by the respondents before him, referring to one as having a "scant factual basis", and concluding that, contrary to those arguments, "Mr Douglas knew exactly what was going on". There is also His Honour's reference to "the uncorroborated evidence of Mr Douglas that he had received legal advice about this matter, and believed he was proceeding lawfully" being "outweighed" by the other matters to which His Honour referred, thereby conveying a rejection, or at least doubt, of the veracity of that evidence. There are significant parallels here with both the findings of Magistrate Reynolds and the findings of the Finance Brokers Supervisory Board Inquiry No 2 of 1998. It suggests to us that Mr Douglas remains prepared to rely upon dubious arguments and fashion his evidence to suit those arguments, just as he was found to have done by Magistrate Reynolds some 13 years ago.

iv) Aggregation of all matters

95 We accept the applicant's submission that it is necessary, in considering whether or not Mr Douglas would be a fit and proper person, to consider all relevant matters in the overall context of his history. That history includes Mr Douglas' antecedents in terms of business activities set out in Mr Douglas' statement (exhibit 4). The matters particularly relied upon by the applicant included the fact that he commenced the business known as "Aussie Cash", a micro-lending business commenced in 2000, that it has dealt with in excess of 70,000 customers in that time, during which it had experienced an extremely low complaint record. Aussie Cash has been generous in its sponsorship of various sporting organisations and community causes. Mr Douglas provided a number of written references attesting to his good character, and recounted in his written statement that on an occasion in 2000, at grave risk to his personal safety, he defended a youth who was being attacked by a group of people in Northbridge and was called as a witness for the prosecution at the trial of the accused.

96 An explanation was given by the Commissioner regarding the lack of complaints concerning the operations of Mr Douglas or his company. The explanation was that, not being a currently licensed credit provider, there is no capacity for the Department to field complaints regarding unlicensed activity. Further, the sorts of inquiries and checks relating to the activities of licensed operators are not applicable. We are prepared to find in favour of the assertion on behalf of Mr Douglas that had there been any serious misgivings regarding his abilities or level of service, complaints would have come to the surface. However, the fact remains that there are a number of discrete matters upon which the Commissioner has relied drawing attention to Mr Douglas' fitness and propriety, as we have discussed.

97 What we need to assess is whether Mr Douglas is a fit and proper person to hold a credit providers licence. The inquiry we are required to undertake is somewhat more targeted than a general inquiry into a person's "character". We do not doubt Mr Douglas' knowledge, or at least capacity to acquire knowledge in relation to the credit provider regime. However, we have found that, at significant times over a number of years, he has demonstrated a failure to comply with requirements with which he ought to comply, and a willingness to act where he was unauthorised to act. Combined with this, he is prepared to rely upon arguments not strongly supported by, if not at odds with, the facts in vindication of his conduct. Looking at all these matters in aggregate, Mr Douglas does not, in our view, satisfy the Sobey test of a person "possessed of sufficient moral integrity and rectitude of character as to permit him to be safely accredited to the public, without further inquiry, as a person to be entrusted with the sort of work which the licence entails".

Conclusion and order

98 For the reasons given above, we have concluded that the applicant's director, Mr Douglas, is not of good reputation or character or in any other way would not be a fit and proper person to be the holder of a credit provider's licence if he were to apply for the licence personally, and therefore that the ground for the Commissioner's refusal of the applicant's application for such a licence under the C(A) Act is made out. In those circumstances, we believe that the Commissioner's decision is the correct and preferable decision and should be affirmed.

99 The Tribunal orders:

1. The application for review is refused.
2. The decision of the Commissioner for Consumer Protection to refuse the applicant's application for a credit provider's licence pursuant to the Credit (Administration) Act 1984 (WA) is affirmed.
   

I certify that this and the preceding [99] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

MR T CAREY, MEMBER

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