CITATION: Clarke v Commissioner of Fair Trading, Office of Fair Trading [2004] NSWADT 273 DIVISION: General Division APPLICANT PARTIES: Graham Charles Wilder Clarke RESPONDENT Commissioner of Fair Trading, Office of Fair Trading FILE NUMBER: 043129 HEARING DATES: 27/08/2004 SUBMISSIONS CLOSED: 08/27/2004 DATE OF DECISION: 11/29/2004 BEFORE: O'Connor K - DCJ (President) APPLICATION: Property, Stock and Business Agents Act - Real Estate, Business, Stock and Station Agent - cancellation of licence - Property, Stock and Business Agents Act - Real Estate, Business, Stock and Station Agent - disqualification - Real Estate, Business, Stock and Station Agent - cancellation of licence - Real Estate, Business, Stock and Station Agent - disqualification MATTER FOR DECISION: Principal matter Administrative Decisions Tribunal Act 1997 Bankruptcy Act 1966 (Cth) LEGISLATION CITED : Farm Debt Mediation Act 1994 Property, Stock and Business Agents Act 1941 Property, Stock and Business Agents Act 2002 Davidson v Commissioner for Fair Trading [2004] NSWADT 200 CASES CITED: McDonald v Commissioner for Fair Trading [2004] NSWADT 124 Smith v Commissioner for Fair Trading [2004] NSWADT 182 APPLICANT REPRESENTATION: M Giugni, solicitor RESPONDENT J Coss, solicitor ORDERS: 1. The decision under review is:; (a) affirmed as to cancellation of the licence; and ; (b) varied as to disqualification with the period of disqualification reduced to two months; 2. The respondent to notify the applicant of the commencement and expiry dates of the period of disqualification remaining to be served; 3. The stay order to remain in force until the commencement date referred to in order 2. REASONS FOR DECISION 1 The applicant for review, Mr Clarke, has held a real estate, business and stock and station agent's licence (Licence Number 1085265) under the Property, Stock and Business Agents 2002 (the Act) since 29 September 2003. 2 In February 2004 the Commissioner (as successor to the Director General, Department of Fair Trading) commenced disciplinary action against Mr Clarke under Part 11 of the Act on the basis that he might be a 'disqualified person' within the meaning of s 16(1)(e). Section 16(1)(e) provides: ' 16 Disqualified persons (1) A person is a disqualified person for the purposes of this Act if the person: … (e) at any time in the 3 years preceding the application for the licence or certificate of registration, 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 the Director-General is satisfied that the person took all reasonable steps to avoid the liquidation or administration.' 3 Relevantly s 14 provides: ' 14 Eligibility for licence or certificate of registration (1) A natural person is eligible to hold a licence only if the Director-General is satisfied that the person: …(d) is not a disqualified person …'. 4 By decision dated 16 April 2004 the Commissioner found that Mr Clarke was a disqualified person. The Commissioner exercised the power given by s 192(1)(g) and cancelled the licence. Pursuant to s 192(1)(h) he specified a period of disqualification, two years. The decision was declared to be operative from 8 May 2004. 5 Mr Clarke, as permitted by s 200, lodged his application for review on 6 May 2004. The usual rule is that an application for review can only be made after an internal review of the original decision has been finalised by the administrator: Administrative Decisions Tribunal Act 1997 (the Tribunal Act), s 55(1). That had not occurred at this point. Mr Clarke had come to the Tribunal as a matter of urgency to invoke its jurisdiction to grant a stay of an administrator's order (Tribunal Act, s 60). 6 There is a power (s 55(2)(c)) to dispense with the requirement of internal review if the Tribunal is satisfied that 'it is necessary for the Tribunal to deal with the application in order to protect the person's interests and the application to the Tribunal was made within a reasonable time following the decision of the administrator concerned'. The Tribunal is so satisfied. 7 On 11 May 2004 the Tribunal stayed the Commissioner's decision subject to two conditions: 1. that trust funds received by Mr Clarke are to be banked in a trust account not controlled by him; and 2. that Mr Clarke notify the Office of Fair Trading in writing and provide details of the trust account to be used for this purpose. General Principles 8 Section 16(1)(e) is a new provision. It commenced operation on 1 September 2003. It goes further than equivalent provisions found in the previous principal Act, the Property, Stock and Business Agents Act 1941, in that it reaches back three years prior to the date of an application for a licence. The provision is one of a group of three provisions dealing with personal bankruptcy or company insolvency. 9 The Tribunal has already dealt with three applications for review arising under the new provisions: McDonald v Commissioner for Fair Trading [2004] NSWADT 124, Smith v Commissioner for Fair Trading [2004] NSWADT 182 and Davidson v Commissioner for Fair Trading [2004] NSWADT 200. 10 It has expressed the following views as to the approach to be taken in examining the question of whether the licence holder took 'reasonable steps' to avoid the bankruptcy or insolvency: (i) A general inquiry into the wisdom or otherwise of the original financial dealings that ultimately ended in bankruptcy or insolvency is not contemplated by the Act. The point at which the inquiry commences is when the applicant was 'faced with the possibility' of bankruptcy or insolvency ( Davidson at [20]) or was 'aware' or 'should have been aware' ( McDonald at [21]) of that possibility. The focus is the steps taken to avoid the relevant event (see Smith at [17]) – in cases of the present kind, administration, and later liquidation. (ii) Subject to (i), in assessing reasonableness the Tribunal must examine all the relevant facts and circumstances. (McDonald at [25]), (iii) The steps taken by the applicant must be objectively reasonable in the sense that they would be those taken by a 'reasonable person endowed with the knowledge and experience of the [applicant]'. (McDonald at [26-27]) 11 To these should probably be added a fourth, though it is obvious enough from the provision: (iv) The person under notice has the task of satisfying the Commissioner that he or she took all reasonable steps to avoid the insolvency. Material before the Tribunal 12 The evidence relevant to this matter is drawn from the submissions made by Mr Clarke to the Office of Fair Trading, the material placed before the Tribunal by the Commissioner and by Mr Clarke and the evidence given by Mr Clarke at hearing on 27 August 2004. Key documents are the formal interview conducted by the Commissioner's delegate on 17 March 2004 and the further submissions made to the Office of Fair Trading by Mr Clarke dated 31 May 2004 in connection with the intended internal review which, in light of the Tribunal's acceptance of the early lodgment of the application for review, did not proceed. The Circumstances 13 Mr Clarke made his licence application on 28 July 2003. 14 He said in that letter: 'I, Graham Charles Wilder Clarke, was a Director of two companies that were placed in liquidation in 1999. Both companies owned rural farming properties and had some common shareholding and were operated as one operation. The principal company was a company set up in 1956 and was controlled by my father who owned the controlling shares in this company. The properties were severely damaged by bushfire, causing losses of $1.5 million, over and above prudent insurance. This put financial constraints on the properties and therefore the companies, and led to a private mortgagee taking possession of the properties. Following legal advice, we believe there is a very sound case for damages against the mortgagee. An agreement between the companies and the private mortgagee, made at Mediation, to allow a period of time for the companies to trade out of the potential short term financial difficulties, and to allow a harvest to be completed and a refinancing package implemented, was broken by the mortgagee with the installation of the receivers. A large amount of funds was lost due to poor risk management and grain trading losses by the receivers. Although the financier and their receiver were totally paid out following harvest, this event put the companies into a position that they could not recover from. This matter is still outstanding. Until this matter is settled it will not be known if any external creditors will remain unpaid. I trust this information meets with your approval.' 15 This letter led the Office of Fair Trading to make further inquiries. It ascertained that within three years of the date of the application Mr Clarke had been director and secretary of a family company ($2.00 paid up capital), which had been subject to winding up. The company was West Wilder Pastoral Pty Limited ('West Wilder' or 'the company'). It was placed in receivership on 16 December 1996 and went into liquidation on 10 June 1997. From 23 May 1997 to 4 May 2003 he had been a director of the company; and he had been secretary of the company from 4 May 1992 to 4 May 2003. The company was deregistered on 4 May 2003. 16 The liquidator's report dated 28 August 1997 (Ex D) shows that the company had net liabilities of $1,098,932.90. Of this amount, $990,000 constitutes debts said to be owed to related parties being Mr Clarke and his wife, and the other family company Comerford Pastoral Pty Ltd. In cross-examination, he was pressed in relation to this aspect of the liquidator's report. He said that this amount represented the total debt of the two farms at the time. The reference to '$990,000' should, the Tribunal considers, be disregarded in obtaining a true picture of the level of indebtedness of the company. 17 The other unsecured creditors that were listed appear from their names mainly to be trade creditors of a usual kind. In this group 16 creditors are listed with an amount outstanding of $109,000. 18 In the material before the Tribunal the first indication that Mr Clarke had serious financial problems is the official record of the entry by he and his wife into a composition with creditors under Part X of the Bankruptcy Act 1966(Cth) on 31 August 1995, which concluded on 22 November 1995. 19 During 1995 Mr Clarke made attempts to raise a loan of $950,000. He had credible independent valuations valuing the two properties at approximately $1,800,000. Ultimately he was successful in obtaining a loan for $520,000, secured by two first mortgages dated 21 September 1995, at 12%, interest only, payable quarterly in arrears. The parties named as borrowers were Mr and Mrs Clarke, Comerford Pty Ltd and West Wilder. In response to questions in cross-examination, he said that the purpose of this loan was to pay out a loan from one of the major banks. 20 By March 1996 an interest payment had not been paid when it fell due. This led to a creditor's notice being issued in March 1996 requiring mediation under the Farm Debt Mediation Act 1994. The mediation session took place on 3 September 1996. In evidence at hearing, he said that the amount due by way of unpaid interest was about $20,000 and the crop payment due after the next harvest on the crop was in the order of $600,000. He was asked what steps he took when the interest payment was missed. He said he contacted the finance broker in Wagga Wagga who had arranged the finance, and was advised to stay with the lender. He stated that he went to mediation as a result of advice. 21 Under the mediation agreement, the lender agreed not to take enforcement action if all arrears were made up by 3 October 1996. If the borrowers failed to pay the arrears by that date, the agreement specified that the lender was entitled to apply to the Rural Assistance Authority (the administrator of the Farm Debt Mediation Act) for a certificate of satisfactory mediation (a s 11 certificate required before court orders are sought); and was entitled to file with the Supreme Court consent orders. 22 The agreement went on to provide that if consent orders were filed, then during the three months following the date of filing the lender would not advertise or conduct any sale of the property or enforce any writ of possession obtained by it. This clause was of great significance to Mr Clarke as he saw it as a guarantee that he could not be forced off the property until after the harvest had been completed. 23 Mr Clarke failed to pay the arrears by 3 October 1996, and so again fell into breach. 24 During the August-October period he had been seeking to raise additional capital by way of second mortgage. Mr Clarke filed independent documents showing that he was offered $230,000 on certain conditions relating to the second mortgagee's rights in the event of default; and that these conditions required the consent of the first mortgagee, which (according to the documents) was not given. 25 At hearing there was a statement of agreed facts, i.e. that there was an offer of finance on or about 30 August 1996 by way of second mortgage but it was not accepted by Mr Clarke because of front end fees that were seen as exorbitant. It is unclear whether this statement refers to the $230,000 loan just mentioned, or another attempted loan recorded in the papers filed by Mr Clarke (a loan which had a proposed interest rate of 25% and substantial fees). 26 As noted earlier a receiver/manager was appointed on 16 December 1996. On 20 December 1996 representatives of the lender attended the farm, served relevant process on Mr Clarke and immediately took over the operation of the farm. This documentation has not been produced by Mr Clarke to the Commissioner or the Tribunal. 27 This action, on its face, did not conform with the mediation agreement. Mr Clarke said that he had heard that the lender had acted precipitately because it had been suggested by another person to the lender that Mr Clarke might not use the imminent crop payment to pay out the loan. (The crop payment was reliably estimated at approximately $600,000.) In response to his solicitor's re-examination, he rejected the suggestion that he had any intention as at December 1996 of not applying the crop payment to the loan obligations. 28 In relation to receiver/manager's entry into possession Mr Clarke took no immediate action. He waited until early January 1996. The Rural Assistance Authority confirmed that no s 11 certificate had issued. A few days later he contacted his solicitor who had returned from holidays to ascertain whether he should challenge the mortgagee. According to Mr Clarke, his solicitor's advice was that it might be costly to contest the action, and ultimately futile. Mr Clarke said he accepted that advice. 29 Mr Clarke's evidence is that the lender was paid out in full by early to mid-1997. There were insufficient funds to meet the claims of the unsecured debtors of the company. It was placed in liquidation on 10 June 1997. 30 Mr Clarke had accepted appointment as a director of the company on 23 May 1997. He did this, he said, so that he could be of assistance in respect of the conduct of the liquidation. He said in evidence that he thought the company was wound up in 1997. It would appear to be the case that Mr Clarke took no further interest in the affairs of the company after this time. According to the Commissioner's statement of reasons referring in turn to the formal interview, 'Mr Clarke seemed genuinely surprised that the Liquidator's administration ended in May 2003'. At hearing he confirmed this understanding. 31 Mr Clarke's firm view is that had he been lent the sum of $950,000, as was initially promised during the loan negotiations of 1995, there would have been enough financial capacity to have allowed him to continue to run the farm through the summer of 1996-97. He asserted that he would have been able to maintain solvency had he been left in charge. 32 He was questioned as to what advance notification he got as to the appointment of a receiver/manager. It was put to him that in such a case the lender was obliged to notify the company of such a proposed appointment, and it was noted that he was the secretary of the company at the time. He said the receiver's representatives simply turned up at his door with a formal notice, and took over operations at the farm. 33 It was suggested to Mr Clarke that his account of the financial situation as at late 1996 was odd. The Tribunal agrees. It is difficult to understand why such draconian action was taken by the lender if the interest arrears were of the order of $20,000 (an amount that fits in with the interest rate, 12% payable quarterly) and the anticipated crop payment was of the order of $600,000. 34 He was examined on his lack of action over the Christmas period, and essentially repeated the explanation given to the Commissioner in response to the notice to show cause, i.e. that he let the matter wait until his solicitor had returned from holidays and until the Rural Assistance Authority had opened in the new year. He did not respond to the proposition that after contacting the Rural Assistance Authority in January in relation to the arrears claim he again did very little to rescue the situation. 35 In answer to further questions from the Tribunal, Mr Clarke said that he left the farm in 1999, and that all notices had gone to the family's accountant, an uncle in Kenthurst. He had died around 1998 or 1999. The company's registered address was the accountant's office at Kenthurst. 36 The material filed by Mr Clarke shows that he made numerous attempts to raise additional capital by way of loan in the years 1997-1998 but was unsuccessful. His explanation is that credit providers did not proceed with initial proposals as there was an adverse entry in the relevant commercial credit histories. 37 The two properties were sold in 1999, at which time Mr Clarke and his family vacated their home there, and moved to a rented home in Bowral. Mr Clarke proceeded to embark on a new career. He undertook a course in Introduction of Business Broking given by a company called Business Connection International Pty Ltd ('BCI') (completed July 2000). Between June 2000 and July 2003 he worked as a full-time employee of a real estate agent, Anthony M Arena, of BCI. He obtained a Certificate in Small Business Management from the Illawarra Information Technology Centre, TAFE (completed December 2000), and ultimately a Diploma in Business (Real Estate Management) from the Real Estate Institute of New South Wales (completed May 2002). 38 Finally, the Tribunal notes that one of Mr Clarke's contentions in his submissions to the Office of Fair Trading dated 31 May 2004 is that he is not caught by s 16(1)(e) because he was not at the material times (the period preceding the placement of the company under administration) a director of the company. The nature of the responsibilities of a director are such that a director is properly to be regarded as a person 'concerned in the management of a corporation'. But there can be other possibilities, for example senior executive officers in a corporation with employees. In this instance it is clear that the company was an alter ego of Mr Clarke. This is highlighted by scrutiny of the mediation agreement of 3 September 1996. Mr Clarke signed for himself and for all other parties including the company. There is no doubt, the Tribunal considers, that he was 'concerned in the management' of the company. The Commissioner's Assessment 39 In the reasons for determination given on 16 April 2004, the Commissioner's delegate made the following criticisms of Mr Clarke's conduct: (i) Mr Clarke should have done more than it seems he did to contest the appointment of the receiver/manager. (ii) In the Commissioner's view, 'surprisingly little' was done 'to preserve a family asset of such high value'; and: 'This seeming lack of action by Mr Clarke continues through to the liquidation of the company.' (iii) The Commissioner acknowledged Mr Clarke's concern over the legality of the enforcement action. He said: 'Mr Clarke contends that the 16 December 1996 appointment of the Receiver and Manager was not lawful (and I accept that Mr Clarke had a reasonable basis for the view) but he did little to contest the appointment.' (iv) Most importantly in the view of the Commissioner, 'Mr Clarke did not meet the terms of the 3 September 1996 agreement and has not explained why.' (v) 'The uncontested appointment of the Receiver and Manager led inevitably to the appointment of the Liquidator. This administration went on for many years and Mr Clarke, even though he was a director of the company, did not keep himself informed of the progress of the liquidation'. (vi) The Commissioner noted that the events took place many years ago. 40 The Commissioner said the following as to the objectives of these provisions: '[T]he purpose of the Act is clear. A person concerned in the management of a corporation under administration or subject to a winding up order is a disqualified person unless that person satisfies the Commissioner or his delegate that the person took all reasonable steps to avoid the administration or winding up. This provision of the Act is not intended to punish a person who had an involvement in a relevant sense in a failed business. Rather, it is designed to ensure that consumers are protected against the risk of dealing with a person who has not properly managed their business affairs. This kind of protection gives consumers confidence when dealing with real estate licensees. It gives them confidence that a licensee with whom they may have dealings has met minimum standards of suitability. Property dealings are likely to be the most significant financial dealings in which most consumers will be engaged. It is essential to an orderly property market that consumers have confidence that the market is orderly and that the intermediaries through whom they may transact business are appropriately qualified.' Submissions 41 Mr Coss for the Commissioner examined Mr Clarke's conduct from a commercial perspective. He pointed to the lack of action after 3 October 1996 (the due date under the mediation agreement for making up the arrears). He criticised Mr Clarke's statement that he only became aware of receivership when representatives of the receiver arrived at his home on 16 December 1996. Mr Coss also criticised his lack of action, if he felt at that point that the receivership was invalid (due to the absence of a certificate of satisfactory mediation), in taking urgent action to obstruct the receivership. He moved slowly not even getting legal advice until three weeks later, by which time the receiver's representatives were in full control of the farm and the harvest. He also criticised Mr Clarke's apparent disengagement from the affairs of the company especially after the liquidator took over, even though he remained secretary and a director. 42 Mr Giugni for Mr Clarke said that his client believed under the terms of the mediation agreement that he had a longer period, i.e. at least three months after 3 October 1996, in which to continue to find a solution to his financial problems. He said that the appointment of the receiver occurred under a Mortgage Debenture not by way of Court order so the usual notice processes may not have applied. (The Tribunal repeats that there is no documentation before it going to this matter.) He submitted that Mr Clarke did get legal advice in a reasonably timely way and then acted on it, by not challenging the receivership. He submitted that Mr Clarke should not be criticised for adhering to legal advice. For a variety of reasons it was not practical to resist the receivership. 43 He said the circumstances were ones where it was almost impossible to say what might have been reasonable other than what Mr Clarke did. He noted that the liquidator chose not to proceed quickly with the winding up of the company. Had the liquidator chosen to proceed quickly this matter may never have led to Mr Clarke's situation falling subject to s 16(1)(e) of the Act. Had it been wound up at any time prior to 28 July 2000, Mr Clarke's situation would have fallen outside the reach of s 16(1)(e). 44 He submitted that had Mr Clarke taken steps to disrupt the lender's actions in December 1996 that may itself have contributed to a worse result, interfering with the access of the lender to the crop. (The Tribunal notes in contradistinction that Mr Clarke has repeatedly suggested that things would have been better had he been left in control running the farm until it was sold.) He contended in favour of his client that Mr Clarke did not engage in any action that might have escalated the costs and fees of the liquidation. Tribunal's Assessment 45 The Tribunal listed earlier in these reasons the four principles that should govern inquiries under s 16(1)(e). In this case the main difficulty has to do with what the Tribunal has described as principle (iv) – the need for the licence-holder to satisfy the Commissioner that he or she took all reasonable steps to avoid the insolvency. In the account given of the circumstances, the Tribunal has referred to a number of gaps in the material provided by Mr Clarke. 46 The Tribunal is not able to reach a clear conclusion on the question of the time at which it could be said Mr Clarke ought reasonably to have been aware that the company might be facing administration or liquidation. 47 There is a letter from 1991 (Ex B, p 74) signed by Mr Clarke under the name of Comerford Pastoral Pty Ltd to Elders indicating that $500,000 of a line of credit would be devoted to full repayment of all outstanding monies to Elders. It also referred to another business enterprise being developed by Mr Clarke, called 'Wilder Uniform Rental'. 48 Mr Clarke indicated at hearing that it had been necessary to make substantial borrowings after the bushfire. As noted earlier, by mid-1995 he and his wife were having difficulty paying their debts, and had entered into a Part X composition. 49 The scale of the borrowings reflected in the letter of 1991, plus what is well known about the state of interest rates in the early 1990s, together with the difficulties indicated by the composition that occurred in late 1995 suggest to the Tribunal that Mr Clarke may well have been at a point where there was a risk that the company was unable to meet its debts and be forced into receivership some time well before 1995. 50 Because of the lack of clarity as to the point at which the company was under financial pressure sufficient to raise the prospect of collapse, it is not possible easily to deal with the third principle (as this decision describes it) - what steps would a reasonable person endowed with the knowledge and experience of Mr Clarke have taken. 51 As to this matter, the Tribunal makes the following observations. 52 Mr Clarke presents as a person of some commercial acumen and experience. Obviously he is highly experienced in the financial management of a large farming enterprise. The 1991 document mentioned above refers to his involvement in another business venture, Wilder Uniform Rentals. 53 He had one strategy in 1995 and 1996 – to raise enough money to keep the farm going. It is not clear what became of the crop payment for early 1996. At the least that payment had not proved sufficient to avoid the need to seek substantial additional funds – he wanted $950,000 and eventually received $520,000. He had insufficient liquidity to meet the first interest payments. As it transpired the crop payment for early 1997, according to Mr Clarke's evidence, cleared the commitments under that loan, but there remained a need for further funds to began planting for the next season. Mr Clarke was unable to raise those funds. The real debts of the company (about $109,000) were never cleared. The farm continued to operate in receivership. It is not clear what the overall state of debt of the farms was. 54 In the period before and after the mediation agreement, Mr Clarke made attempts to raise additional funds but was unsuccessful. It would seem that when Mr Clarke gave the promise in the mediation agreement to pay the arrears within a month he was depending on one of his second mortgage loan applications being successful. 55 Having defaulted, the lender was free to take enforcement action. Had the lender strictly complied with the terms of the mediation agreement and implemented the process promised under the agreement on the first available date, it could have been in possession on 4 October and moved to sell as from 4 January. If that had occurred, the lender still would have received the crop payment. There was nothing in the terms of the agreement to support Mr Clarke's contention that he believed that he had until 28 February 1997 to get things in order. 56 Mr Clarke has been criticised by the Commissioner for not taking more active steps to preserve the farm when the lender's representatives moved in on 16 December 1996. 57 As to the significance or otherwise of his inaction, the Tribunal is inclined to the view put by Mr Giugni for Mr Clarke. The Tribunal doubts whether it would necessarily have been a 'reasonable step' for Mr Clarke to have resisted the action, even though a formal basis seemingly existed (the absence of the s 11 certificate). The fundamental facts were that Mr Clarke was unable to meet the terms of the loan, and there had been mediation. The lender would have been able, as Mr Giugni said, to obtain the s 11 certificate without difficulty. 58 The Commissioner placed some reliance on Mr Clarke's lack of action thereafter. The Tribunal doubts whether much attention can be given to the conduct of the person concerned once the administration or liquidation has been put in place. In a case of this kind it would not be usual for a director of the failed enterprise to have any significant involvement in the liquidation. Other people were now in charge of the trading activities of the farm. 59 In the Tribunal's view, s 16(1)(e) is not concerned with post-liquidation or post-administration conduct. The primary focus is the steps that might have been taken ahead of administration. For example, could steps have been taken which would have forestalled the liquidation or prevented it altogether? Were there options, reasonably available, that might have meant that creditors were not left out of pocket at all, or, at least, they would have got a better return than the ultimate distribution? In the Tribunal's opinion, the only weight that can be given to post-administration/liquidation events is to the extent that they might shed light on what the person could have done ahead of those events to delay or prevent their occurrence. 60 The Tribunal therefore has not attached significant weight to Mr Clarke's relative lack of activity once the die had been cast. There is some force in the point made by Mr Giugni that it may well be the proper thing that the displaced manager not get in the way of the new manager. On the other hand, it is apparent from material that Mr Clarke continued to try to raise funds to bail out the situation through 1997 and 1998. 61 In this case Mr Clarke did take the two most obvious steps. He had tried to top up the existing $520,000 facility with a second mortgage in the range of $220,000 to $230,000. He tried to obtain a moratorium on enforcement through the mediation process. There were two additional loan offers that looked promising. He said that he was not prepared to take one of them, because of what he described as high front end charges. There was also an extremely high interest rate proposed (25%). 62 While his lack of vigour in resisting the entry of the receivers in December 1996 was properly the subject of concern on the part of the Commissioner, it is difficult to see what else practically he could have done to reverse that situation. Had he gone to his solicitor before Christmas, rather than early in the New Year, the advice would have been the same. He was clearly not in a financial position to take on costly and uncertain litigation. 63 As the Commissioner noted in his statement of reasons, Mr Clarke is clearly deeply affected by the loss of the family farm, established and run successfully for decades by his parents and then, in cooperation with them, by Mr Clarke and his family. 64 If it could clearly be said that Mr Clarke was first aware, or should have been first aware, of the possibility that the company might become insolvent as at, say, mid-1995, the Tribunal would be inclined to the view that he took 'all reasonable steps'. But the gap in the financial history for 1991-1995 means that there can be no clarity on this vital first question. There is also the problem, as the Commissioner noted, of a lack of clarity as to why Mr Clarke could not pay the arrears due in October 1996. 65 In cases of this kind (a single enterprise conducted, as is often the case, by way of inter-linked natural persons and other legal entities such as family companies and family trusts), there is a degree of artificiality in focusing in a blinkered way (as has happened here) on the circumstances affecting one element. The information before the Commissioner and the Tribunal does not explain the overall financial position of the enterprise, which is relevant to understanding the particular matter of Mr Clarke's actions in connection with the indebtedness of West Wilder. 66 Because of these reservations, the Tribunal is not minded to interfere with the Commissioner's decision. 67 In its view the material put forward by Mr Clarke is not sufficient to enable the Commissioner (or the Tribunal on review) to conclude with confidence that he took all reasonable steps to avoid the administration or liquidation. 68 This outcome will, the Tribunal recognises, disappoint Mr Clarke, who clearly takes some pride in his family's achievements in farming (which he sees as having been curtailed by a catastrophe beyond their control, the bushfires of 1987) and who has gone to considerable efforts to redirect his life. He is unlucky to have been caught by s 16(1)(e). Had the company been wound up quickly he would have fallen outside the reach of the new provision. Equally had Mr Clarke moved to have himself removed as a director at any time before July 2000 he would have fallen outside the reach of the new provision. 69 It is also very much in his favour that he was reasonably open in his dealings with the Office of Fair Trading over the fact of his recent adverse commercial history. The Tribunal accepts his evidence that he drew this matter to attention when he set out on his studies. He again drew it to attention in his application for a licence. He has been caught by a change in the law that took effect only a few weeks after he applied for his licence. 70 As indicated, though for somewhat different reasons, the Tribunal agrees with the Commissioner's finding that Mr Clarke is a 'disqualified person' within the meaning of s 16(1)(e). It follows, the Tribunal considers, given the terms of s 14 of the Act, that the only order can be one of cancellation of the licence. 71 The question that remains is whether the Commissioner's decision as to the period of disqualification should be let stand. 72 Mr Clarke presented a number of strong testimonials. In losing the family farm, he has gone through what was obviously an immensely painful experience. It is the case that about $100,000 in value of unsecured debts have been left unpaid. Mr Clarke has indicated a preparedness to submit on a long term basis to the restrictions found in the stay order. 73 Mr Clarke is of an age where he probably only has a relatively small number of years of active, full-time work ahead of him. He has 'reinvented' himself in his 50s. In this instance, the stigma of being declared disqualified will itself substantially meet the public protection objectives that this provision serves. A short period of disqualification is all that is necessary. 74 Accordingly the Tribunal's decision is to reduce the period of disqualification to one of two months, with the Commissioner to notify Mr Clarke of the commencement and completion dates. This is desirable so that the Commissioner can address any implications that affect Mr Clarke's work-in-hand, and adjust the period to take account of any period of disqualification already served (which the Tribunal assumes were the days 6 to 11 May 2004). The stay order is to lapse on the commencement day of the remaining period. Order 1. The decision under review is: (a) affirmed as to cancellation of the licence; and (b) varied as to disqualification with the period of disqualification reduced to two months. 2. The respondent to notify the applicant of the commencement and expiry dates of the period of disqualification remaining to be served. 3. The stay order to remain in force until the commencement date referred to in order 2. 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.