Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Naylor v Commissioner of Police, NSW Police Force [2014] NSWCATOD 43 Hearing dates: 12 July,13 August, 10 September, 16 October. Decision date: 02 May 2014 Jurisdiction: Occupational Division Before: P H Molony, Senior Member Decision: The Tribunal affirms the decision to revoke Essential Security Pty Ltd's Class MC Master Licence. Catchwords: Security Industry - close associate - breach of conditions of licence regarding close associate - revocation for - public interest- revocation in public interest - avoidance of licensing regime - abuse of mutual recognition principles. Legislation Cited: Security Industry Act 1997 Security Industry Regulation 2007 Mutual Recognition Act 1992 (Cth) Cases Cited: Avilion Group Pty Ltd v Commissioner of Police, NSW Police (GD) (No 2) [2010] NSWADTAP 56 Ibrahim v Commissioner of Police [2009] NSWADT 245 Jones v Dunkel (1959) 101 CLR 298 Category: Principal judgment Parties: Applicant - Jasmin Naylor Respondent - Commissioner of Police, NSW Police Force Representation: Applicant - M White (first day). In person thereafter Respondent - J Mattson File Number(s): 133185 reasons for decision Introduction 1Jasmin Naylor applied to review a decision of the Commissioner of Police to revoke the Class MC Master Licence issued to Essential Security Pty Ltd (the company) under the Security Industry Act 1997 (the SIA). Ms Naylor is the nominated holder and licensee of that master licence. The decision to revoke the company's licence was made on three grounds: * That Mr Muhammad Farooq, who has a disqualifying conviction, is a close associate of the company and Ms Naylor; * That a condition of the master licence had been breached by the failure to disclose that Mr Muhammad Farooq was a close associate; and * That it is in the public interest that the master licence be revoked. 2Section 16 of the SIA is concerned with criminal convictions that disqualify a person from obtaining a licence under the SIA. Relevantly, s 16(1)(a) provides - (1) The Commissioner must refuse to grant an application for a licence if the Commissioner is satisfied that the applicant: (a) has, within the period of 10 years before the application for the licence was made, been convicted in New South Wales or elsewhere of an offence prescribed by the regulations in relation to the class of licence sought, whether or not the offence is an offence under New South Wales law, ... (5) A reference in subsection (1), (2), (3), (4) or (4A) to an applicant includes, in the case of an application for a master licence, a reference to each close associate of the applicant. 3There is no dispute that Mr Farooq, who is married to (but said to be now separated from) Ms Naylor, was convicted of larceny on 8 September 2008. This is an offence prescribed by clause 18(d) of the Security Industry Regulation 2007 (the SIR). At all times he was disqualified from obtaining a security licence under the SIA. Anomalously, because he holds an ACT security licence, he has been able to obtain a NSW security licence under mutual recognition arrangements, despite being disqualified from obtaining a NSW licence directly. This is so because s 21 of the Mutual Recognition Act 1992 (Cth) which applies in NSW by virtue of the Mutual Recognition (New South Wales) Act 1992 provides that: (1) A person who lodges a notice under section 19 with a local registration authority of the second State is entitled to be registered in the equivalent occupation, as if the law of the second State that deals with registration expressly provided that registration in the first State is a sufficient ground of entitlement to registration. 4A licensee of a master licence is a required to comply with conditions attached to a licence. Clause 34 of the SIR puts in place reporting conditions with respect to close associates. It provides: (1) It is a condition of a master licence that the licensee must notify the Commissioner in writing of: (a) any change in the particulars relating to close associates included in an application under clause 13 (2) (a) (ii) or (3) (d), and (b) the name, date and place of birth and residential address of any person who subsequently becomes a close associate of the licensee. (2) The notification must be made within 14 days after the change occurs or the person becomes a close associate. 5Close associate is defined in s 5 of the SIA: (1) For the purposes of this Act, a person is a close associate of an applicant for, or the holder of, a licence if the person: (a) holds or will hold any relevant financial interest, or is or will be entitled to exercise any relevant power (whether in his or her own right or on behalf of any other person), in the business of the licence applicant or holder, and by virtue of that interest or power is or will be able (in the opinion of the Commissioner) to exercise a significant influence over or with respect to the conduct of that business, or (b) holds or will hold any relevant position, whether in his or her own right or on behalf of any other person, in the business of the licence applicant or holder. (2) In this section: relevant financial interest in relation to a business means: (a) any share in the capital of the business, or (b) any entitlement to receive any income derived from the business, whether the entitlement arises at law or in equity or otherwise. relevant position means the position of director, manager, and other executive positions and secretary, however those positions are designated, and such other positions as may be prescribed by the regulations for the purposes of this definition. relevant power means any power, whether exercisable by voting or otherwise and whether exercisable alone or in association with others: (a) to participate in any directorial, managerial or executive decision, or (b) to elect or appoint any person to any relevant position. 6Section 26 of the SIR sets out the Commissioner's power to revoke a licence. It relevantly provides: (1) A licence may be revoked: (a) (Repealed) (b) if the licensee: (i) supplied information that was (to the licensee's knowledge) false or misleading in a material particular in, or in connection with, the application for the licence or the renewal of the licence, or (ii) contravenes any provision of this Act or the regulations, whether or not the licensee has been convicted of an offence for the contravention, or (iii) contravenes any condition of the licence, or (c) (Repealed) (d) for any other reason prescribed by the regulations. (1A) The Commissioner must revoke a licence where the Commissioner is satisfied that, if the licensee were applying for a new licence, the application would be required by this Act to be refused. (2) The Commissioner may revoke a licence by serving on the licensee, personally or by post, a notice stating that the licence is revoked and the reasons for revoking it. (3) ... 7In the company's case the Commissioner revoked the master licence relying on s 14(1)(b)(iii),(d) and (1A). The latter relied on clause 29 of the SIR which provides - For the purposes of section 26 (1) (d) of the Act, a licence may be revoked if the Commissioner considers that it is not in the public interest for the person to whom it is granted to continue to hold it. Issues 8The issues to be determined in this case are: * Whether Mr Farooq is a close associate of the company? * If so, whether the corporate master licence should be revoked as a result? * Whether Ms Naylor breached a condition of the master licence by failing to advise that Mr Farooq was a close associate of the company? If so, what consequences follow? * Whether the corporate master licence should be revoked in the public interest? Factual background 9The events leading to the revocation decision are relatively complex, although a large number of them are not in dispute. I will briefly outline those it is necessary to understand for the purposes of this decision and indicate how I have resolved those that were disputed. 10Essential Security Pty Ltd (the company) was first registered as a company on 16 September 2010. It directors and equal shareholders were Ms Naylor and Mr Farooq. On 19 September 2010 it was registered as the holder of the trading name "Excellent Security". 11On 26 October 2010 Ms Naylor applied for a master security licence for Excellent Security Pty Ltd under the SIA (the first application). She nominated herself and Mr Farooq as close associates. His conviction was disclosed. The fee for this application was paid on a credit card in Mr Farooq's name. Predictably, this application for a master licence was refused on 29 November 2010 on the ground that a nominated close associate (Mr Farooq) had been convicted of a prescribed offence and was disqualified from obtaining a licence under the SIA. The Commissioner was therefore required to refuse to grant the company a master licence. 12Ms Naylor subsequently sought an internal review of that decision. In correspondence supporting that request both Ms Naylor and Mr Farooq noted that he is currently the holder of a NSW Class 1ACG security licence, which was issued through mutual recognition of an interstate (ACT) licence held by him. They argued that if he is ineligible to be a close associate of a master licence holder, he should not have been granted his personal licence. On 13 December 2010 a delegate of the Commissioner confirmed the decision not to grant a licence on internal review, stating that there was no discretion in the matter. 13On 23 December 2010 the company filed an application in the Administrative Decisions Tribunal (the ADT) to review the decision made on internal review. The application was made by Mr Farooq on behalf of the company, who also sought an interim order granting the licence. He wrote: We are paying for insurance, work cover, public liability, phone bills etc from my own pocket. I'm not doing any business just waiting for master licence. I'm losing security contracts. 14Those applications were dismissed by Hennessey DP on 25 January 2011 on the basis that there was no discretion to grant a master licence in the circumstances. The refusal was mandatory because Mr Farooq, a close associate, was a disqualified person. 15On 1 February 2011 Ms Naylor lodged a change of company details with ASIC advising that Mr Farooq had ceased to be a director of the company. She became the sole director and secretary of the company. They remained equal shareholders. 16On 9 February 2011 Mr Farooq rang the paralegal who had represented the Commissioner at the ADT hearing. She made a note of that conversation in an email timed at 11:01 on that day. Relevantly, it read: I received a call from Mohammad FAROOQ about 10:15 this morning. He introduced himself as being from Excellent Security. Was telling me that he had removed his name from the company. Kept talking about "my company" and wanting "to get my licence back." He said he had spoken to a solicitor about it (in reference to my previous suggestion that they get legal advice). He was calling me in order to get the application reassessed in light of the changes he had made to the company structure. I explained that my office only dealt with legal matters, and any application would be dealt with by SLED. ... 17On 14 February 2011 Ms Naylor lodged a fresh application for a corporate master licence for the company. She attached a letter from ASIC confirming the change to her application. Mr Farooq was not nominated as a close associate: Ms Naylor was. The application fee was paid by credit card. That credit card payment was signed for by Mr Farooq. 18Consequently, in March 2011 the Commissioner asked Ms Naylor to provide further information regarding Mr Farooq's employment by the company. On 17 March 2011 responded with respect to Mr Farooq as follows: Duties that will be performed: - Administrative work such as, answering customer queries and complaints - Handle and manage office expenses, disbursements and correspondence - Organise and maintain accounts, filing systems, and employee records - Maintain and update records, reports and datasheets on a periodic basis - Dealing with job interviews Position - Mr Farooq will be an employee of Excellent Security Pty Ltd, he will be employed as a manager. His role will be administration work and dealing with customers for security guard jobs. Also, Mr Farooq will be working as a security guard. Wages - Mr Farooq will be given a weekly wage from Excellent Security Pty Ltd. However, at present there are no agreements or any contracts between Mr Farooq and Excellent Security Pty Ltd. 19On 12 April 2001 Ms Naylor's application for a corporate master licence for the company was refused on the basis that Mr Farooq was a close associate of the company, and, as he is disqualified from holding a licence, the SIA required that the a master licence not be granted to the company. 20Once again Ms Naylor sought an internal review. She provided a three page statement in support of her application in which she specifically addressed Mr Farooq's role. She said: 12. Although I married Mr Muhammad Farooq in 2009 in Australia and have been living in harmony, we are financially independent from each other. 13. I am aware that Mr Farooq has been convicted in September 2009 for a prescribed offence which I have never been a party. 14. However he had changed since then and had proven a transformed person and has had no further troubles with the police or any other law enforcement body to date. 15. He is presently working as a security guard since 2010 and holds a valid security guard license. 16. He earns a fair amount of money which comfortably places him in good stead and quite sufficient for his well being and day to day financial necessities. 17. The Commissioner should be satisfied that with the fact that I am never convicted in NSW or elsewhere of an offence prescribed by the regulations in relation to the class of license sought. 18. I state that I have never been found guilty and convicted for any offence whatsoever to be deprived of my Master License. 19. I firmly believe that I must not be disadvantaged for my husband's character or being associating a person who is not a partner to my' business. 20. Nevertheless I have not nominated Mr Farooq as a close associate of Excellent Security Pty Ltd and have no intention to do so. 21. I assure the Commissioner and confirm that Mr Farooq would not play any role whatsoever in my business if such license is granted to me. 22. I will not be influenced by him and would take my own decisions independent of him and I would not allow him to take part in any activity of the business whatsoever. 23. I will take full responsibility and I would also take charge of my duties and responsibilities as expected by a Master License holder. 24. I will further ensure that all management decisions would be taken by me and reiterate the fact that Mr Farooq would never interfere or influence on my business and decisions as the commissioner of Police expects by me. 25. I also state that there exist no contract or agreement whatsoever between Mr Farooq and Excellent security Pty Ltd. 26. I further state that I would be the sole signatory to all tax related documents, company cheques books etc., of the company if my application is successful. 21Following consideration of Ms Naylor's statement the Commissioner issued the company with a master licence on 7 May 2011. The only close associate noted on that licence is Ms Naylor herself. 22A principal activity undertaken at the company's premises once it had a master licence was the delivery of security training for applicants for Queensland Security Licences. Ms Naylor's evidence was that this training was provided by the Peacekeepers Security Training Institute at the company's premises. The company accepted payment for the training courses on behalf Peacekeepers. 23Ms Naylor conceded that by providing training for Queensland security licences the company provided a means whereby NSW residents, who are ineligible for a security licence in NSW but satisfy the less strict Queensland criteria, can obtain a NSW security licence by first obtaining a Queensland licence, and then applying for a NSW security licence under mutual recognition. She conceded that this was a 'backdoor" method of obtaining a NSW security licence, but argued that it was lawful. 24Ms Naylor's initial evidence was that from the time the master licence was granted Mr Farooq did not play any role in the operations the company. He had not worked for it from then on. In cross-examination however, Ms Naylor conceded that that at the time she wrote her statement for the Commissioner she intended Mr Farooq to continue acting as the company manager and that the assurances in her statement were false. She said that at that time he still had authority to sign the company credit card. 25When pressed she conceded that he had "done some work" for the company in the period between the master licence being granted and January 2012. At that time she said he still had a key to the business premises. 26In November 2011 Mr Farooq reported a break in at the premises of the company. Police attended the premises and spoke with him. Police records (COPS Event E10618186) indicate that Mr Farooq identified himself as the owner of the business. Mr Farooq denied saying this in his evidence to me. He said that he had not worked for the company after it obtained its master licence in May 2011. On the occasion of the break in he had just been visiting Ms Naylor and had notice that the door had been forced on his arrival. He had called the police to report the break in and had not said that he was the owner of the business. He agreed that Ms Naylor had not been at the premises at the time. The inconsistences between his evidence of his continuing role in the company and that of Ms B Naylor (following concessions made in cross-examination) are obvious. 27The COPS event of the break in records that Mr Farooq was the person who reported the break in on the morning of 23 February 2011. It says - Unknown person/s have gained entry into the business at the location by forcing the lock on the first floor front door by unknown means. The Person Reporting who is the owner of the victim/organisation advised that the ground floor side entry door to the building has no damage and may have been left unlocked. ... The Person Reporting was the LPOP and no other person/s at the location during the incident. The address given to Police by Mr Farooq for himself was the address of the company. The telephone numbers he provided were those of the company. 28Mr Farooq's evidence regarding this event is improbable. It is unlikely that he would be visiting his wife and partner at work when she is not there. The fact that he gave his address, as that of the company, to Police attending the break in supports the Police record that he described himself as the owner of the business. His presence is also consistent with him having a continuing role in the company. 29Ms Naylor and Mr Farooq both say that they separated as husband and wife in January 2012. Ms Naylor said that Mr Farooq has not worked for the company since then. Each gave evidence that they had separated amicably and sorted arrangements out between themselves. Despite being requested to do so Ms Naylor did not produce any documents evidencing demands made concerning the separation, or any documentation relating to the agreement they reached. She said she had not obtained legal advice and that there was no legal documentation. They are not divorced. She has not yet applied for a divorce. 30During the course of the hearing details of the arrangement Ms Naylor and Mr Farooq say they reached on separation were slowly eked out. Both gave evidence that following the separation the company mobile phone was transferred to Mr Farooq as was the company logo. This was so despite the fact that the logo includes the company master licence number, and that the company was still operating legally and continued to hold a master licence. 31On 9 February 2012 ASIC was notified of a change of company details, namely that Mr Farooq had been reappointed as a director of the company. The notice of change of company details advising of this was completed by Mr Farooq, with the assistance of the company accountant. Mr Farooq's evidence was that that this was done to secure his interest in the company following the separation. This conduct is at odds with both Ms Naylor's and Mr Farooq's evidence that they had settled their differences following their separation. 32There is undisputed evidence before the Tribunal that in order to effect that his re-appointment as a director Mr Farooq must have had access to the confidential ASIC corporate key, which operates like a PIN number, with respect to transactions with ASIC affecting companies. There is a dispute as to whether or not Mr Farooq made this change with or without Ms Naylor's knowledge and consent. 33Both Ms Naylor and Mr Farooq insist this is the case. Mr Farooq's evidence was that he made the change to secure his investment in the company. He had purchased office equipment and owned half its shares. The relevant documents to make the change were filed by the company accountant, and that he (Mr Farooq) did not have the corporate key. While Ms Naylor gave conflicting evidence as to when the accountant (Mr Butt) was retained by the company I accept that notification of the change was lodged by the accountant. In my view Mr Farooq's explanation of this event points to him exercising significant executive power and control of the company, to the extent that he had authority to direct to company accountant to process his appointment as a director of the company in January /February 2012. 34The Commissioner produced evidence that demonstrated that following the registration by ASIC of a major change in a corporation such as the nomination of a new director, ASIC confirms that change by letter to the company concerned. While Ms Naylor agrees that she received annual returns etic, from ASIC, she has no memory of receiving a letter advising that Mr Farooq had been reappointed a director. This is an extremely convenient memory failure that I have difficulty accepting. 35Ms Naylor did agree that she received the annual company return from ASIC in September 2012. She did not produce that document despite being requested to do so. I accept that the annual return showed that Mr Farooq was a director of the company. Ms Naylor and conceded that this document had been received but said he had not read it, simply passed it on to the accountant. Once again I have difficulty in accepting that Ms Naylor and as sole director of the company did not read its annual return 36On 11 March 2013 the Commissioner issued a notice of revocation of the company's master licence. The reasons for the revocation were that information had been received that Mr Farooq, a disqualified person, held a relevant position and was now a close associate of the company under the SIA. The licence was revoked because (a) by not notifying the Commissioner of the change the company had breached a condition of its licence; (b) a disqualified person is a close associate of the company; and (c) it was in the public interest to do so. The revocation was served at the business address of the company on a person who identified himself as Mr Farooq. 37Ms Naylor agreed in evidence that she was not present when the revocation was served. Ms Naylor said that Mr Farooq, "just happened to be there at the time." When asked to explain how he came to be at the offices of a business he said he did not work for, when Ms Naylor and was not there, he said he was, "just visiting the ex." This innocent explanation is simply evidence of convenience given to explain his presence at the company premises. Viewed in the context of all the other evidence relating to his role in the company, Mr Farooq's innocent explanation for his presence is simply untrue. On balance I am satisfied he was working for the company when he discovered the break in at the company premises. 38On 26 April 2013 Ms Naylor's solicitors wrote to the Commissioner seeking an internal review. Relevantly that letter said: Our client informs us that the said Muhammad Farooq has now resigned from all positions with Excellent Security Pty Ltd. As evidence thereof we enclose herewith copy ASIC search/notice dated 19th April 2013. The ASIC reference for the change is 19/04/2013 .7E5163842. You will note that Mr Farooq is no longer the director or shareholder, and that Ms Jasmin Lee Naylor is now the sole director and shareholder. Unfortunately we only have the first page. But no doubt you may do your own searching and verifications. Our client says the reason for [Mr Farooq's] (probably unwise) ... reinstatement was that Jasmin Naylor and Muhammad Farooq had been in a domestic relationship had terminated. The parties were negotiating certain family law or property issues between them. Muhammad Farooq was re-stated to the company either to better secure his equity in any property settlement or as part of that property settlement. The writer did not and does not act for Muhammad Farooq or Ms Jasmin Naylor in those negotiations or any family law agreement. However both Mr Muhammad Farooq and Ms Jasmin Naylor have confirmed to the writer that the aforesaid assertions are correct. Ms Jasmin Naylor's livelihood may be seriously adversely affected if Excellent Security's security licence is not re-instated. 39This letter is also relevant to the issue of Ms Naylor's knowledge of Mr Farooq being named as a director in the change of company details submitted to ASIC in February 2012. While both Ms Naylor and Mr Farooq maintain that she had no knowledge of the change when it was made, this letter points to there being an understanding that Mr Farooq be re-instated as a director to preserve his equity in the company. In her evidence denied that this was the case. When asked whether she had attended the solicitor with Mr Farooq she said she had not. Mr Farooq on the other hand staid they had attended together. In my view, the letter demonstrates that Ms Naylor instructed her solicitors that on their separation Mr Farooq was reinstated as a director to between secure his equity. Those instructions are inconsistent with Ms Naylor's evidence that Mr Farooq arranged for his reinstatement without her knowledge. 40On balance I accept that Ms Naylor was a party to Mr Farooq being reinstated as a director. This explains how he the corporate key could be used to make that change. 41ASIC records reveal that on 19 April 2013 Mr Farooq ceased being a director of the company and his equal shareholding in the company was transferred to Ms Naylor. At all material time before then Mr Farooq and the company had held the only issued shares in the company in equal numbers. 42On 9 May 2013 the decision to revoke the company's corporate master licence was confirmed on internal review. The decision found that - 1. Excellent Security Pty Ltd knowingly contravened a condition of the Master security licence by failing to disclose Mr Muhammad Farooq as a close associate (as defined by the Security Industry Act 1997). On 8 September 2009, Mr Muhammad Farooq was convicted of 'Larceny value <=$2000'. This is a prescribed offence that disqualifies him from holding a security licence or a relevant position in a corporation for the mandatory 10 year period from the date of his conviction. The corporation wasfully aware that Mr Farooq was disqualified from holding a security licence or a relevant position in a corporation due to previously being refused a Master security licence when Mr Farooq was nominated as a close associate. In addition, I am satisfied that it is not in the public interest for Excellent Security Pty Ltd to hold a Master security licence. I therefore affirm the original decision to revoke the Master security licence. 43On 7 June 2013 Ms Naylor lodged an application for review of the decision to cancel the company's master licence. She also sought a stay of the revocation decision. That application for a stay was refused by the Tribunal on 11 June 2013. The company has been without a master licence since then. 44At some unspecified time after this Ms Naylor said that the company vacated the business premises. says that he immediately commenced his own business, the Executive Security Company Pty Ltd., and rented the same business premises. ASIC records show that company was incorporated on 28 May 2013 and commenced operation on 25 June 2013. Mr Farooq said he allowed those premises to be used by Peacekeepers to offer training for Queensland security training, but that his company did not provide that training or charge for it. He explained that he did this to gain experience to assist his ambition for his business to become a registered training organisation. 45On 21 June 2013 and 1 July 2013 advertisements appeared on Gumtree for security training. The advertisements included a logo for the," Excellent Security Training Institute ML 410475033". That number is the master licence number of the company. At the time the advertisements were placed on Gumtree that licence had been revoked. The advertisements listed a number of other security services provided by the company, and included a contact phone number that is Mr Farooq's mobile number and had been a mobile number used by the company. The advertisements invited interested person to contact "our team" and concluded "Kind Regards Muhammad." 46Both Mr Farooq and Ms Naylor said that had not been aware of these advertisements until their attention was drawn to them in the course of proceedings. They had not authorised them. Mr Farooq gave evidence that he believed that the ads had been placed without his authority or experience by an employee of his. No evidence was produced to support this assertion. 47Ms Naylor indicated in her evidence that if she was successful in setting aside the revocation order she would hope to continue her relationship with Peacekeepers. She said that she is presently studying a university course and had been doing so throughout 2012. Despite a fill course load she said she was able to devote her attention to the business. 48On the second day of hearing, in the course of submissions, she said that she was moving to Canberra to pursue a career in the Australian Federal Police, and would hand the company master licence back if the appeal is successful. I pointed out to her that the evidence raised issues concerning her credibility and honesty, which could have grave ramifications on her future if I decided them adversely to her. I urged her to consider whether she wished to proceed with the application given the risks she faced. I adjourned the proceedings for some time to allow her to consider that issue, during which time she sought legal advice, before indicating she wished to proceed. 49Among the material relied on by the Commissioner were statements made by persons who had dealings with an organisation they referred to as "Excellent Security" concerning training for a Queensland Security Licence. These were from: (a) Sadeq Karimzadah who paid Farooq at Excellent Security $700 in October 2011 to assist him to obtain a Queensland Security licence. He did not attend any training but was given a number of certificates including a statement of attainment which recorded that he had attained the competencies that form part of a Certificate III in Security Operation. Beside a seal it read - Excellent Security 3/12-14 Campbell St, Blacktown Ph: .... Email: info@excellentsecurity.com.au iwww.excellentsecurity.com.au Mr Karimzadah said that once he had obtained his Queensland Licence Mohammad had helped him to complete his application for a NSW security licence. (b) Hafizullah Amin who paid for training that he undertook at the address of the company in May and June 2013. The training was for a Queensland Licence which would then enable him to apply for a NSW licence. He had personal contact with persons called Hamjad and Hussein. Attached to his statement was a certificate of attainment headed "Peacekeepers Security Training Institute", with a Queensland address. It recorded that he had attained the competencies that form part of a Certificate III in Security Operation. Beside a seal it read - Excellent Security 3/12-14 Campbell St, Blacktown Ph: .... Email: info@excellentsecurity.com.au iwww.excellentsecurity.com.au (c) Mohammed Qaseem Anwar who met Mahommad Farooq at the office of "Excellent Security" in May 2013 and paid him $550 for a training course for a Queensland licence. Mr Farooq told him he could apply for a NSW licence once he was registered in Queensland. Unlike Mr Amin, Mr Anwar said he did not attend the training course but was given a work book and answers which he completed. Mr Farooq then assisted him to apply for a Queensland licence. He obtained his NSW licence in August 2013. Attached to his statement was a certificate of attainment headed "Peacekeepers Security Training Institute", with a Queensland address. It recorded that he had attained the competencies that form part of a Certificate III in Security Operation. Details of Excellent Security can be found in the certificate, beside the seal. Mr Anwar subsequently made a statutory declaration withdrawing these claims, instead alleging he was intimidated into providing his initial statement by Police. Ms Naylor relies on that statutory declaration. 50The Commissioner required Mr Anwar to attend for cross-examination with respect to his statutory declaration. He did not do so. The Commissioner submitted that I should draw a Jones v Dunkel (1959) 101 CLR 298inference that if Mr Anwar was called that his evidence would not have assisted the company. Ms Naylor said she had been unable to contact him. In circumstances were she discovered that her solicitor would not be appearing only days before the hearing I decline to draw that inference. 51It is also important to record that before the hearing the Commissioner served Ms Naylor with a detailed request for the production of documents relevant to the issues in this case. This included documents evidencing her separation from Mr Farooq and any demands made by or settlement reached between them; tax returns for the company, BAS statements for the company, ASIC annual returns, lease documentation, business books, contracts and records of the company: Mr Farooq's personnel file, contract and promotional materials relating to him, and, her course timetable. 52Ms Naylor's compliance with this request was minimal. She produced - * A current information extract regarding the company form ASIC dated 8 June 2013. * Two page of the company's bank statements covering the periods 18 to 25 February 2013 and 17 to 23 May 2013. * Balance sheet s at 30 June 2012 and 30 June 2011. * Company tax return for year 2010 to 2011. * Three invoices for rent addressed to Excellent Security Pty Ltd for the period 25 June 2013 to 24 July 2013, 25 July 2013 to 24 August 2014, and 25 August 2013 to 24 September 2013. * Various invoices relating to insurance and utilities. * Parts of the company's 2011 financial statements. 53It is important to note that the invoices from the estate agent for rental of the company premises in the period 25 June 2013 to 24 September 2013 show that the company was still being invoiced for rental for those premises and, therefore, prima facie, was still the lessee. Is Mr Farooq a close associate of the company? 54I am satisfied that at the time the company's master licence was revoked Mr Farooq was a director, equal shareholder and manager of the company. He was therefore a close associate of the company at that time. 55While Ms Naylor was insistent that she was not aware he was a director at that time, I do not accept her denials. The evidence in this matter demonstrates that Mr Farooq was a primary force behind the establishment of the company and has exercised an active role in the management of its business at all times. 56The evidence as presented by Ms Naylor and Mr Farooq seeks to paint Ms Naylor as an ambitious young woman who set up her own business and is being frustrated in growing it by her former partner's criminal record. Beneath the surface however, it is clear that Ms Naylor has consistently sought to underplay and minimise the role Mr Farooq has had in the operation of the business. Her evidence to the Tribunal has not been reliable. She agrees that she gave false assurances to the Commissioner concerning Mr Farooq's role in the company in order to obtain the master licence, when it was her intention that he continue acting as manager. In her evidence to the Tribunal she initially held to that falsehood, but was forced to concede that she had lied in cross-examination. Her evidence in my view is suspect and cannot be relied on without corroboration or external verification. 57The same observation needs to be made with respect to Mr Farooq. He gave false evidence to the Tribunal on a number of occasions. He falsely said he was not involved in the management of the company and did not work for it from the time it was granted the master licence. The evidence demonstrates he was actively involved in in the management of the company and working for the company since then. That evidence consists of Ms Naylor's evidence, the fact that Mr Farooq was repeatedly found at the business premises, and the statement from the three trainees whom he dealt with in that period. 58Their evidence raises significant questions as to Mr Farooq's integrity and the true nature of the training services offered by the company. 59I am satisfied that since the revocation of the master licence Mr Farooq has continued to operate the business from the business premises, initially in the guise of the company, but since June 2013 under the guise of Essential Security Training Company Pty Ltd.. While both Ms Naylor and Mr Farooq claimed that he had taken over the lease, there is no confirmatory evidence that this is case. To the contrary the evidence, which consists of invoices for rent in the period June to September 2003, demonstrates that the company remain the lessee of the premises. I find that this is the case and reject Ms Naylor's and Mr Farooq's evidence to the contrary. 60The statements from Mr Karimzadah and Mr Amin demonstrate that Mr Farooq was continuing to operate a business at those premises after he separated from Mr Farooq and after the master licence was revoked. The statements of attainment provided by both those men indicate that that business was using the trading name Excellent Security, which is still registered to the company. This conclusion is also supported by the advertisement placed on Gumtree in June and July 2013 which showed Mr Farooq as the contact person for security training business called Excellent Security Training Institute, with a master licence number that was the same as that issued to the company, and carrying on business at the company's business premises. I do not accept that these advertisements were placed without Mr Farooq's knowledge or consent by his secretary. She was not called to give evidence in that regard. 61It seems clear and I am satisfied that despite the revocation of the master licence, and despite Mr Farooq's removal as a director and shareholder of the company, that he has continued to operate the business of the company at the premises. I do not accept that Ms Naylor was unaware of this. Indeed, I am satisfied that she is complicit in Mr Farooq's conduct and has sought to mislead this Tribunal as to the precise nature of what has occurred. Her references to his business being conducted at premises he has since leased were misleading. 62The reality is that Mr Farooq is now running the business of the company at the company's premises. This is consistent with him continuing his long standing role in that business undertaking. Mr Farooq, however, is no longer a director or shareholder of the company. Nice distinctions regarding ownership of the trading name by the company, and the company's continuing control of the business it developed, have been disregarded. Ms Naylor and Mr Farooq have treated the business operation as their own to manage and dispose of. They in effect sought to split the business from the company for the purpose of retaining the company's master licence. The precise nature of the arrangement reached between them regarding the business is unclear, although it is apparent that it has resulted in Mr Farooq managing and running the business operation under the, very similar, name of his new company. 63The issue that then arises is whether Mr Farooq is now a close associate of the company. He is no longer a shareholder and does not presently hold a relevant financial interest in the company, as a result of transfer of his shares to Ms Naylor. There therefore is no evidence that enables me to positively conclude that he will hold a relevant financial interest in the company in the future. 64While I am satisfied that he is now managing the business of the company, the evidence is insufficient to conclude that he now exercises a similar role within the company, or will do so in the future. He is no longer a director of the company. As I result I am not satisfied that he now holds or will hold a relevant position in the company itself. 65The evidence points to Mr Farooq having exercised considerable power in the company prior to his most recent removal as a director, and the transfer of his shareholding. Since then he has exercised power over the business undertaking of the company, as the person managing and running that business. He does so under an arrangement with Ms Naylor the terms of which are unclear, and not as a result of a directorship or shareholding in the company. 66In Avilion Group Pty Ltd v Commissioner of Police, NSW Police (GD) (No 2) [2010] NSWADTAP 56 the Appeal Panel considered what was necessary to demonstrate that a person is entitled to exercise a relevant power with respect to a corporate licensee. The Appeal Panel said - 83 This question of the scope of the term 'entitled' in section 5(1)(a) of the SI Act is not an easy one. Our conclusion with regard to it is that, despite the force of some of the arguments put by Mr Bourke, the intention of the Act is that the term should be confined to 'entitlements' that are capable of enforcement by legal means. We base this conclusion on the following considerations:- (i) The dictionary definitions cited to us, together with the dicta described above, delineate a concept that embraces legal rights and 'just claims' but stops short of de facto powers. (ii) In section 5(1)(a), the phrase 'is or will be entitled to exercise any relevant power' is followed immediately by a phrase suggesting legal entitlement - i.e., 'whether in his or her own right or on behalf of any other person'. (iii) To characterise as an 'entitlement' the form of 'surreptitious' controlling influence that the Tribunal found Mr Blissett to be able to exercise over Avilion takes the term 'entitlement' a long way outside the realm of legal rights and 'just claims'. (iv) There are a number of forms of legal entitlement - for example, a purely contractual right, enforceable through an action for damages - under which a person might participate in the management decisions of a company without being formally appointed to a recognised position within the company, such as that of director or manager. For this reason, restricting 'entitlement' in section 5(1)(a) to legal entitlements does not narrow the scope of 'relevant power' to the extent that it is effectively synonymous with 'relevant position'. (v) If the legislature had wished, in this part of the definition of 'close associate', to refer to situations where a person actually exercises - as opposed to being entitled to exercise - a significant influence over decisions made by a license applicant or holder, it could very easily have used language that made this clear. (vi) As the Tribunal's decision illustrates, the 'public interest' ground on which it separately based its decision to confirm the Commissioner's revocation of Avilion's licence may, in appropriate circumstances, cover the situation where an unsuitable person exercises a significant influence over the conduct of the business of a licence holder, but has no 'entitlement' to exercise such influence. (vii) The legislature's use of the term 'entitled' actually brings within the ambit of 'close associate' persons who at the relevant time do not exercise such influence, but are merely 'entitled' to do so. The task of proving that a person is 'entitled' to exercise a 'relevant power' and for that reason is or will be 'able' to exercise a significant influence over the conduct of the business of the licence applicant or holder may sometimes be easier than proving that he/she does in fact exercise such influence. 84 As a result of this ruling on the meaning of 'entitlement', our conclusion on this ground of appeal is that the Tribunal did err in law in deciding that because Mr Blissett 'has [been], is and will be able to exercise a relevant power in Avilion' (to quote its words in [85]) he was, as stated at [86], a 'close associate'. The criterion that the Tribunal applied, being whether Mr Blissett was or would be 'able' to exercise a relevant power, was incorrect. It should have determined whether Mr Blissett possessed a legally enforceable 'entitlement' to do this. 67Applying that decision to the question of whether Mr Farooq holds a relevant power it is clear that he no longer holds any legally enforceable entitlement to exercise a relevant power in the company. He did hold such a power up until the time he ceased being a director, and his shareholding in the company was transferred to Ms Naylor, on 19 April 2013. 68As a consequence of all the above I find that until 19 April 2013 held a financial interest, was entitled to exercise a relevant power, and held a relevant position in the corporate licensee. He was therefore a close associate of the company. 69After that date he did not hold a relevant financial interest and was not entitled to exercise a relevant power. While he was the manager of the business from that time on, the evidence is insufficient to enable me to positively conclude that he did so as the holder of a relevant position in the company. As a result I am not satisfied that after 19 April 2013 he was a close associate of the company. Whether Ms Naylor breached a condition of the master licence by failing to advise that Mr Farooq was a close associate of the company. 70The focus of argument with respect to this issue concerned whether Ms Naylor breached the condition imposed by clause 34(1)(b) of the SIR by failing to advise the Commissioner within 14 days of Mr Farooq being registered as a director. Ms Naylor's response was that she had been unaware that Ms Naylor had registered himself as a director. 71I have already indicted that I accept that Ms Naylor was aware that Mr Farooq had arranged to be shown as a director at the time he did so. Even if that were not the case, I am satisfied that she was notified of this change shortly thereafter on receipt of advice of the change from ASIC. She took no action with respect to it. She did not report the change to the Commissioner and did not seek to remove Mr Farooq as a director. I am also satisfied that she was again advised of his status as a director in the annual statement she received in September 2012, and again took no action with respect to it. 72It follows that I am satisfied that Ms Naylor failed to notify the Commissioner that Mr Farooq had become a close associate of the company by virtue of being appointed a director (holding a relevant position) from the time of that appointment. 73It is also to be noted that at all material times up to 9 April 2013 Mr Farooq was an equal shareholder in the company. As a consequence he held a relevant financial interest and relevant power in the company throughout that time. Ms Naylor never notified the Commissioner of Mr Farooq's financial interest and power. It follows that during the currency of the master licence Ms Naylor failed to advise the Commissioner that Mr Farooq was a close associate and thereby breached the condition imposed by clause 34(1)(b) of the SIR. 74As a consequence of those failures the Commissioner, and this Tribunal in his shoes, has a discretion under s 26(1)(a)(ii) to revoke the company's master licence on the ground that the licensee contravened a condition of the licence. In my opinion this breach of condition by Ms Naylor is egregious. This is so because Ms Naylor was well aware that the Commissioner was of the view that Mr Farooq is a person who should not be involved in the management of a licensed corporation. Her failure to notify the Commissioner that Mr Farooq had been appointed a director is a flagrant breach in the circumstances. Her earlier failure to advise that Mr Farooq was a close associate by virtue of his shareholding is also a breach of condition. In my opinion the decision of the Commissioner to revoke the corporate master licence was the correct and preferable decision given the history of the matter. 75That history, including the opportunity Ms Naylor was given when she made false assurances that Mr Farooq would be not ne involved in the management of the corporation, persuades me that no weight can be attached to Ms Naylor's present assurances that Mr Farooq will not be involved in the management of the company in future. As a consequence revocation of the master licence remains the correct and preferable decision. Whether the corporate master licence should be revoked in the public interest? 76In Ibrahim v Commissioner of Police [2009] NSWADT 245 Montgomery JM discussed the meaning of the public interest in the context of the SIA: 45 The Tribunal has considered the concept of 'the public interest' in a number of decisions. In Commissioner of Police v Toleafoa [1999] NSWADTAP 9 at paragraph [25] the Appeal Panel stated in regard to a decision to refuse to issue a security industry licence: "25 The "public interest" is an inherently broad concept giving the appellant the ability to have regard to a wide range of factors in choosing whether to exercise a discretion adversely to an individual. As the possibility of refusing an application on the ground of character is dealt with elsewhere in the same section, it is reasonable to infer that the Parliament intended that the public interest discretion operate in areas to which the character ground was not relevant or, possibly, in circumstances where an objection on character grounds would not be sufficient in its own right to warrant refusal." 46 'Public interest' embraces standards acknowledged to be 'for the good order of society and for the well being of its members': Director of Public Prosecutions v Smith (1991) 1 VR 63. The purpose of a reference in legislation to 'the public interest' is 'to ensure that private interests are not the only matters taken into account; to make clear that the interests of the whole community are matters for the [decision-maker's] consideration': Comalco Aluminium (Bell Bay) Ltd v O'Connor and Ors (1995) 131 ALR 657 (at page 681). The relevant interest is therefore the interest of the public, as distinct from the interest of an individual or individuals: Director of Public Prosecutions v Smith. 47 The discretion to issue a licence must be exercised keeping in mind the activities that the person will be engaged in if the licence is granted. Accordingly, the objects and purposes of the Act are relevant i.e. the regulation of the security industry to maintain public safety and to ensure that those who are licensed to operate in the industry are appropriately qualified and persons of integrity: O'Neill v Commissioner of Police, NSW Police [2005] NSWADT 130. The security industry has a special role in ensuring that public order is maintained, in safeguarding community assets and private property and in ensuring that the public and public venues are safe: Haining v Commissioner of Police [1999] NSWADT 6. 77I agree with Montgomery JM's analysis of the objects of the Act, and of the public interest to be served in exercising the discretion to revoke a licence on public interest grounds. 78I have reached the conclusion that the public interest requires that the master licence be revoked. I have done so for a number of reasons. 79First, the company has throughout its period of operation, while holding a master licence, had involved in its management as a close associate a person who is disqualified from obtaining a licence under the SIA. I add, for the sake of clarity, that the fact that Mr Farooq held NSW security licence by virtue of mutual recognition does not change the fact that under the SIA he is a disqualified person and cannot be a close associate of a master licence holder. 80It is not in the public interest to allow the company to continue to hold a master licence. A central objective of the SIA is to ensure that persons of integrity work in the industry. Thus on the introduction of the SIA Mr Gaudry, Parliamentary Secretary, in the NSW Legislative Assembly on 12 November 2002, said at page 6544 of Hansard: The intention of the Security Industry Act is to ensure that high standards of integrity and conduct are maintained within the security industry. Entry to the industry is restricted by the licensing system in order to protect the public interest by diminishing the likelihood of criminal activity within the industry. For this reason, persons convicted of specified offences are barred from working in security. ... Clearly it is in the public interest that persons thought by police to present a public safety or criminal risk are not given special access to premises, persons or goods under the security licencing system. This should apply even where the person has yet to be charged [or convicted] with a specific criminal offence. 81Secondly, while I accept that Mr Farooq is no longer a close associate of the company I am of the view that by virtue of his relationship with Ms Naylor, who is now the sole director and shareholder of the company, that he is still able to exercise considerable influence over the company's operations. Given his history, this is not in the public interest. I am reinforced in that conclusion by the fact that Mr Farooq is now running the business developed by the company, from the premises rented by the company, and delivering the same training as that which has always been offered by the company. It is clearly the same business. 82That the licensee and the company have allowed this situation to develop whereby its business undertaking has been hived off and is now being run by a disqualified person and an unlicensed company, using the company's business name and master licence number, raises real concerns about the company's integrity and its management's ability to manage its affairs. Similarly it reflects very poorly on the integrity of the licensee. It reinforces her lack of control over the operations of the company, and her inability to ensure compliance with the regulatory regime. It once again points to the control over the operations of the business that Mr Farooq has always exercised. Again it is not in the public interest for a company that has allowed its business operations to be taken over and subverted as is the case here, to continue to hold a master licence. 83Thirdly. I am not satisfied that it is in the public interest for a master licence to be held by Ms Naylor as master licensee. This is so because I am satisfied that she has not exercised the degree of control expected of a master licensee over the company's business operations, has not been honest and candid in her dealing with both the Commissioner and the Tribunal, and has not displayed the knowledge and understanding one would expect of a master licensee. Of particular concern is here lack of understanding of the objects and purposes of security industry regime indicated by her view that there was essentially nothing wrong with company facilitating NSW residents to obtain security licences by the backdoor method of mutual recognition. I spent some time discussing this with her, and am satisfied that she could not understand how this could be seen to be undermining the integrity of the NSW security licencing system. 84Fourthly, it is clear that should the company regain its licence and recommence operations (an event that Ms Naylor said ill not occur) then it shall again be in the business of providing training courses for interstate security licenses to NSW residents: not for use interstate, but for the purpose of gaining a NSW security licence by mutual recognition. In my view this pattern of conduct is designed to enable NSW residents to escape the rigours the SIA places on applicants for licences, and is an abuse of the principles underlying mutual recognition. 85Section 19 of the Mutual Recognition Act 1992 (Cth) provides that - (1) The mutual recognition principle is that, subject to this Part, a person who is registered in the first State for an occupation is, by this Act, entitled after notifying the local registration authority of the second State for the equivalent occupation: (a) to be registered in the second State for the equivalent occupation; and (b) pending such registration, to carry on the equivalent occupation in the second State. (2) However, the mutual recognition principle is subject to the exception that it does not affect the operation of laws that regulate the manner of carrying on an occupation in the second State, so long as those laws: (a) apply equally to all persons carrying on or seeking to carry on the occupation under the law of the second State; and (b) are not based on the attainment or possession of some qualification or experience relating to fitness to carry on the occupation. 86The training activities undertaken by the company achieve a situation whereby, through interstate licencing and mutual recognition, the rigours of the NSW security licensing regime can be avoided by NSW residents. This is demonstrated by the statements from the Mr Anwar, Sadeq Karimzadah and Hafizullah Amin. This is not in the public interest. It is not in the public interest that a master licence be held by a company undertaking those activities which undermine the integrity of the licensing regime established by the SIA. 87In my view the Commissioner made the correct and preferable decision in revoking the master licence in the public interest. Conclusion 88As a consequence the Tribunal affirms the decision to revoke Essential Security Pty Ltd's Class MC Master Licence. ********** 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: 02 May 2014