Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Coulthart v Commissioner of Police, NSW Police Force [2016] NSWCATOD 169 Hearing dates: 15 November 2016 Date of orders: 22 December 2016 Decision date: 22 December 2016 Jurisdiction: Occupational Division Before: K Ransome, Senior Member Decision: The decision under review is affirmed. Catchwords: SECURITY INDUSTRY – refusal to grant Corporation Master Security Licence – close associate – whether concerned in the management of a corporation when administrator appointed – whether took all reasonable steps to avoid administration – failure by General Manager to take any steps to ascertain financial position Legislation Cited: Security Industry Act 1997 Security Industry Regulation 2016 Cases Cited: Corporate Affairs Commission v Bracht (1988) 14 ACLR 728 Cullen v Corporate Affairs Commission (NSW) (1988) 14 ACLR 789 Category: Principal judgment Parties: Bryan Coulthart (Applicant) Commissioner of Police (Respondent) Representation: Solicitors: Churchill Lawyers (Applicant) Lindsay Taylor Lawyers(Respondent) File Number(s): 1620164 REASONS FOR DECISION 1. This is an application by Mr Bryan Coulthart for review of a decision by the Commissioner of Police to refuse an application by Shire Security Pty Ltd for a Corporation Master Security Licence under the Security Industry Act 1997 (the Act). The application was refused on 14 April 2016, a decision which was affirmed on 7 June 2016 on internal review. Mr Coulthart was named in the application as a nominated person and close associate involved in the day to day conduct of the security activities of Shire Security Pty Ltd. The relevant law 1. The Security Industry Act 1997 (the Act) establishes a scheme for licensing people to carry on security activities. Section 15 of the Act sets out a number of discretionary and mandatory grounds for refusing an application for a licence. Sub-section 15(4) provides that the Regulations may provide additional grounds. 2. Since the application by Shire Security Pty Ltd was refused, the Security Industry Regulation 1997 has been replaced by the Security Industry Regulation 2016. Under the savings provision in the 2016 Regulation any act, matter or thing that, immediately before the repeal of the 2007 Regulation, had effect under that Regulation is taken to have effect under 2016 Regulation. 3. Clause 13 of the 2016 Regulation is substantially the same as clause 16 in the 2007 Regulation and relevantly provides: 13 Grounds for refusal to grant licence: section 15 (4) (1) Mandatory grounds for refusal—individual For the purposes of section 15 (4) of the Act, the Commissioner must refuse to grant an application for a master licence if the applicant, or a close associate of the applicant: (a) … (b) at any time in the 3 years immediately preceding the application for the licence was concerned in the management of a corporation when the corporation was the subject of a winding up order or when a controller or administrator was appointed, unless: (i) the winding up of the corporation was by way of a member's voluntary winding up, or (ii) the Commissioner is satisfied that the person took all reasonable steps to avoid the liquidation or administration. (2) In determining the reasonable steps that could be taken by a person to avoid bankruptcy, liquidation or administration, the Commissioner is to have regard to the steps that could have been taken by the person at the time that the financial difficulties leading to the bankruptcy, liquidation or administration arose. 1. The meaning of "close associate" is set out in s 5 of the Act and includes a person holding the position of director in the applicant company. It is not in dispute that Mr Coulthart is a director of Shire Security Pty Ltd and is thus a close associate of the applicant company. He describes himself as the owner of the company. 2. At issue is whether Mr Coulthart, a close associate of Shire Security Pty Ltd, in the three years immediately preceding the application for the licence, was concerned in the management of a corporation when an administrator was appointed to that company and, if so, whether he took all reasonable steps to avoid administration. The company in question was MJH Parking Management Pty Ltd. Background 1. Mr Coulthart stated that he was working as the General Manager of a company called Integrity Locksmiths and Security when he was approached by Mr Michael Hingerty, the director of MJH Parking Management Pty Ltd, to work for that company. On 22 July 2015 Mr Coulthart accepted an offer of employment as General Manager of MJH Parking Management Pty Ltd responsible for the day to day running of the business. He commenced employment in August 2015. Mr Coulthart was sent a formal contract of employment by Mr Hingerty on 7 October 2015 but doesn't appear to have signed the contract until 23 November 2015. 2. The position description and duty statement for the position held by Mr Coulthart in MJH Parking Management Pty Ltd describes his role as Group General Manager responsible to the CEO (Mr Hingerty). The purpose of the position is described as being "To manage the Group's resources and use them effectively to grow our business and investigate new business opportunities. To develop and maintain business systems i.e. ERP and QA.". 3. Among the key accountabilities for the position are the following (not complete): ▪ Represent MJH in a professional manner and present the Group's capabilities in keeping with its business goals and its cultural values. ▪ Develop business plans, annual budgets and sales/targets with the CEO. ▪ Advise on and assist with developing business structures and personnel within the Group. ▪ Oversee the Group's business development functions, including branding, marketing, advertising, to ensure consistent and high-profile representation of MJH in the marketplace. ▪ Responsibility for development of staff, including mentoring, training, recruiting and allocation of duties. ▪ Work closely with CEO and Managers to understand and contribute to their Business Development requirements. ▪ Provide training and support for Managers to develop their business development capabilities. ▪ Establish MJH's Quality, Environment, Safety, Drug and Alcohol Policies, HSQE Management System and Emergency Plans. 1. The criteria for the position as set out in the position description include: ▪ Demonstrated success at building relationships with senior executives and owner. ▪ Experience in a senior business development role. ▪ Ability to deliver strong and decisive leadership. ▪ General Management experience. 1. On 23 November 2015 MJH Parking Management Pty Ltd made an application for a Corporation Master Security Licence. Mr Coulthart was nominated as a close associate in relation to that application. On the relevant form his position in the corporation was described as "General Manager". 2. On 19 January 2016 the Australian Taxation Office made an application in the Federal Court of Australia for the winding up of MJH Parking Management Pty Ltd. That application was dismissed on 25 May 2016 and thus the company was not in fact wound up. However, in the meantime on 31 March 2016 Steven Arthur Gladman was appointed as Administrator of the company pursuant to s 436A of the Corporations Act 2001. On 23 May 2016 a Deed of Company Arrangement was executed. Mr Coulthart resigned from MJH Parking Management Pty Ltd in May 2016. The issues 1. There is no question that an administrator was appointed to the company, MJH Parking Management Pty Ltd, within the three years immediately preceding the current application for a security licence. 2. The issues to be determined are whether Mr Coulthart was "concerned in the management" of MJH Parking Management Pty Ltd and, if he was, whether he took all reasonable steps to avoid administration. Was Mr Coulthart "concerned in the management" of the company? 1. The phrase "concerned in the management" contained in cl 13 of the Regulation is not defined. However, that phrase has been the subject of judicial consideration in other contexts. In Corporate Affairs Commission v Bracht (1988) 14 ACLR 728 Ormiston J stated the concept of "management": comprehends activities which involve policy and decision making, related to the business affairs of a corporation, affecting the corporation as a whole or a substantial part of that corporation, to the extent that the consequences of the formation of those policies or the making of those decisions may have some significant bearing on the financial standing of the corporation or the conduct of its affairs. 1. Similarly, in Cullen v Corporate Affairs Commission (NSW) (1988) 14 ACLR 789 Young J stated that in determining whether a person is involved in management if the person is: making decisions as to the direction of the corporation though one does not necessarily look for someone who is making decisions at the highest level, nor is it necessarily so that the manager's decisions will not be subject to obtaining the approval of some higher officer. However, even though a person may be described as a manager if that person is merely carrying out the policy of the corporation in charge of a branch or division of the business and not making decisions as to its direction then probably that person is not taking a management role in the corporation. 1. Mr Coulthart states that, while his position was described as General Manager, he was not actually involved in the management of MJH Parking management Pty Ltd. He states he was not involved in the day to day running of the business, had no access to bank accounts and was not responsible for paying bills – this was the responsibility of Mr Hingerty. Mr Coulthart described himself as a "Project Manager" rather than the General Manager of the company. Although there were about seven employees in the company, he said that he was off to the side and was subject to the direction of and was allocated projects by Mr Hingerty. 2. When questioned about what work he did for the company, Mr Coulthart said he was to work in Queensland and attempt to expand the business in that state. However, he undertook an audit of the company's Queensland operations and identified that the business was running at a loss. In consultation with Mr Hingerty, the Queensland business was subsequently closed down and Mr Coulthart arranged for its closure, including engaging a company to deal with employee redundancies and moving furniture back to Sydney. He stated he was also responsible for re-branding the company, setting up a new website and establishing a Human Resources section and re-drafting contracts. Mr Coulthart said a lot of his time was devoted to the development of an Enterprise Resource Planning system (ERP) which would assist in managing all aspects of the business, including staffing and stocktaking. 3. In relation to the accountabilities set out in the position description, Mr Coulthart said that part of the purpose of developing and implementing the ERP system was so the company could develop business plans, annual budgets and targets, but that this work was not completed. He also said that while it was part of his role to advise on and assist with developing business structures and personnel, he was not able to get to that. He also didn't get to much of his business development function during the time he was with the company. Similarly, he said he hadn't got to reviewing the company's policies. He further said he played no role in the recruitment, development and mentoring of staff as Mr Hingerty looked after recruitment. 4. Mr Coulthart said that when he joined the company he understood that he would have the full range of responsibilities as the General Manager, but that this was not the case. He had no control over the accounts and had little to do with staff or sales. 5. Mr Coulthart stated he was asked by the Administrator to assist in facilitating a Deed of Company Arrangement for MJH Parking Management Pty Ltd. At hearing he said he did this only to the extent that he passed on Mr Hingerty's contact details to a consultant he knew in Melbourne which ultimately led to the Deed being entered into with a Melbourne company. 6. Mr Coulthart said, when MJH Parking Management Pty Ltd was applying for a Corporation Master Security Licence, he was asked by Mr Hingerty to sign the close associate form. He said he sought some advice from the Security Licencing and Enforcement Directorate about whether he should sign the form as a close associate and was advised to err on the side of caution and sign the form if he had dealings with staff of the company. 7. All of the relevant employment documents state that Mr Coulthart was employed as the General Manager of MJH Parking Management Pty Ltd and that he was expected to perform a range of functions commensurate with that role. That he did not, in his words, "get to" a number of those functions is irrelevant. Nor does it matter that he acted under the instructions of the CEO and did not have access to bank accounts to make payments. He was clearly entrusted with sufficient authority to examine operations in the Queensland business and to make recommendations, which were implemented, about its future. He was also entrusted to establish management systems for the company, engage in a rebranding exercise and set up a new website. Part of his role in engaging in all these activities was to make decisions to benefit the company having a significant bearing on the conduct of the company's business. 8. Mr Coulthart described himself as the General Manager of the company and was paid a salary commensurate with the position. That he was asked by the Administrator to help facilitate a Deed of Company Arrangement is further testament to his role as an executive manager within the company. 9. It is apparent that in his activities with respect to the Queensland operations of the company, in re-branding the company and in the development of business systems Mr Coulthart was doing more than carrying out existing policy. While he may have had to consult Mr Hingerty before, for example, the Queensland operation could be closed, it is also apparent that he acted largely autonomously in most respects. His own evidence was that Mr Hingerty was not at the workplace much and was hard to contact. Mr Coulthart gave the impression he was very busy stating he started work at 6:00am and was busy dealing with correspondence and setting up different projects. 10. Overall, I am satisfied on the basis of the evidence provided that Mr Coulthart, both in terms of his formal employment as General Manager and in the nature of the activities undertaken by him during the course of his employment in that position, was concerned in the management of MJH Parking Management Pty Ltd. Did Mr Coulthart take reasonable steps to avoid administration? 1. Having determined that Mr Coulthart was concerned in the management of MJH Parking Management Pty Ltd, the remaining question is whether he took all reasonable steps to avoid administration as required by cl 13(1)(b)(ii) of the Regulation. In particular, the issue is what steps he could have taken at the time the financial difficulties arose. 2. Mr Coulthart states that there was nothing he could do to avoid the company going into administration as he was unaware of the company's financial position. He said that before he joined the company he asked a few people about it but that Mr Hingerty had assured him the company had no liabilities. He said that he had no knowledge of anything untoward until he found out about the action taken by the Australian Taxation Office in January 2016. Mr Coulthart said he was not formally advised of this and only found out about it from his family law solicitor who had seen the insolvency notice. 3. Mr Coulthart's representative submitted, based on an entry in ASIC records that winding up action against the company by the Australian Taxation Office had been initiated on 2 September 2015, that there was nothing Mr Coulthart could have done to avoid administration as the company was in a severe financial position prior to his commencement in August that year. No further information about this action was provided and it appears that that action may not have proceeded. 4. As set above, Mr Coulthart, in his role as General Manager, was involved in the management of MJH Parking Management Pty Ltd and performed a variety of tasks and functions in that role. An administrator was appointed to the company at the end of March 2016. By then Mr Coulthart had been with the company as its General Manager for some eight months. 5. Mr Coulthart's evidence is, in effect, that, although he was General Manager, he had no knowledge of the day to day running of the company and therefore its financial position. He does not appear to have made any substantial inquiries either before or after joining the company about its financial position. He did, however, become aware at an early stage that the Queensland operations were in a financial trouble but this did not prompt him to inquire more generally into the company's overall position. He also appears to have made no further inquiries or taken any action despite being informed in January 2016 of the winding up action taken by the Australian Taxation Office. 6. While I accept that Mr Coulthart did not pay the company's bills (although he states he in fact paid some $20,000 worth of bills on his personal credit card) and was not a signatory on bank accounts, the company was small, comprising only seven staff, and Mr Coulthart appears to have had a fair degree of autonomy in his role. The terms of the job offer from Mr Hingerty and the responsibilities set out in the position description for General Manager with their emphasis on strategies to develop the business, would at the very least envisage on the part of the General Manager an understanding of the current business position before going on to recommend or make changes to the business. There is nothing in the material provided, other than the statements that Mr Hingerty looked after paying bills etc, that Mr Coulthart was prevented in any way from seeking out or being provided with financial and other business information. Indeed, the systems he was developing were partly for that very purpose. In those circumstances it was clearly open to him to take steps to ascertain the company's position and, having done so, to take what steps he could, as General Manager, to remedy it. 7. In my view it is not open to Mr Coulthart to say he knew nothing and therefore could do nothing. It may have been that by the time he was employed the company's position was so parlous that nothing could save it. That is not the point. Mr Coulthart was the General Manager of a small corporation and should have known the position of the company or taken steps to find out. Instead he did nothing. I am therefore not satisfied that Mr Coulthart took all reasonable steps to avoid administration in his role as General Manager of MJH Parking Management Pty Ltd. Conclusion 1. The application by Shire Security Pty Ltd for a Corporation Master Security Licence must be refused because within the three years preceding that application a close associate of that company, Mr Bryan Coulthart, was concerned in the management of another company, MJH Parking Management Pty Ltd when an administrator was appointed and Mr Coulthart failed to take all reasonable steps to avoid administration. Orders 1. The decision under review is affirmed. I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 April 2023