Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Mielczarek v Commissioner of Fair Trading and Commissioner of Police, NSW Police Force [2017] NSWCATAD 5 Hearing dates: 10 February 2016; 31 May 2016; 11 July 2016; 18 July 2016 Date of orders: 04 January 2017 Decision date: 04 January 2017 Jurisdiction: Administrative and Equal Opportunity Division Before: S Montgomery, Senior Member Decision: 1. The decisions under review are set aside. 2. The decision is made that the licences are granted. Catchwords: TATTOO PARLOURS – operator licence – close associate –fit and proper person – public interest Legislation Cited: Administrative Decisions Review Act 1997 Civil and Administrative Tribunal Act 2013; Tattoo Parlours Act 2012. Cases Cited: Austin v Commissioner of Fair Trading & Commissioner of Police [2016] NSWCATAP 179 at AVS Group Pty Ltd v Commissioner of Police, NSW Police Force [2012] NSWADT 1 Blisset v Commissioner of Police, New South Wales Police Service [2006] NSWADT 114 Comalco Aluminium (Bell Bay) Ltd v O'Connor (1995) 131 ALR 657 Constantin v Commissioner of Police, New South Wales Police Force (GD) [2013] NSWADTAP 16 Director of Public Prosecutions v Smith [1991] VicRp 6; [1991] 1 VR 63 Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 Hughes and Vale Pty Ltd v New South Wales (No. 2) (1955) 93 CLR 127 Mielczarek v Commissioner of Police and Commissioner for Fair Trading [2016] NSWCATAD 34 Mielczarek v Commissioner of Police, NSW Police Force (No 2) [2016] NSWCATAP 255 O'Sullivan v Farrar [1989] HCA 61; (1989) 168 CLR 210 Re Queensland Electricity Commission; ex parte Electrical Trades Union of Australia (1987) 72 ALR 1 Smith v Commissioner of Police & Anor [2014] NSWCATAD 184 Sobey v Commercial and Private Agents Board (1979) 22 SASR 70 Stiles v Commissioner for Fair Trading & Commissioner of Police, NSW Police Force [2016] NSWCATAD 30 Category: Principal judgment Parties: Dawn Belinda Mielczarek (Applicant) Commissioner of Fair Trading (First Respondent) Commissioner of Police, NSW Police Force (Second Respondent) Representation: Counsel: N Allen (Applicant) Ms Rao (Respondents) Solicitors: V L Macri Lawyers (Applicant) Crown Solicitor's Office (Respondents) File Number(s): 1510651; 510652 Publication restriction: Section 64 of the Civil and Administrative Tribunal Act 2013 applies to the material filed by the Respondents on a confidential basis, to those paragraphs of these reasons identified as [Not for publication], to the evidence given in private before the Tribunal and to the record of that part of the proceedings conducted in private pursuant to section 49 of the Civil and Administrative Tribunal Act 2013. That material is not to be released to either the Applicant or to the public. Judgment 1. The Applicant has sought review of two decisions by the Commissioner for Fair Trading ("Fair Trading") under section 27(1)(a) of the Tattoo Parlours Act 2012 ("the Act"). Fair Trading determined to refuse to grant the Applicant operator licences in relation to 183 Argyle Street Picton NSW ("the Picton Parlour") and Shop 1/399 Bong Bong Street Bowral NSW ("the Bowral Parlour"). In these reasons I will refer to the Picton Parlour and the Bowral Parlour collectively as "the parlours" and the businesses conducted at the parlours as "the businesses". 2. A delegate of the Commissioner of Police ("the Commissioner") made an adverse security determination ("the ASD") in respect of the applications under section 19(1) of the Act, finding that it would be contrary to the public interest for the licences to be granted. The delegate determined that: "a) it would be contrary to the public interest for the licences to be granted to the applicant for the reasons that: i. Aleksander Gustav Mielczarek (Mr Mielczarek), a close associate of the applicant for the purpose of section 4 of the TP Act, is a Member of the Rebels OMCG and, ii. the applicant did not provide in a written statement the information required under sections 12(1)(b) of the TP Act relating to Mr Mielczarek, a close associate of the applicant." 1. Fair Trading refused to grant the licences, as is mandated by section 16(3)(c) of the Act. 2. The determination was stayed on 27 October 2015 on the condition that the Applicant's former husband, Mr Aleksander Mielczarek ("Sasha") not be involved in the conduct of the businesses at the parlours or attend the business premises. Applicable legislation 1. Section 9 of the Act provides: 9 Types of licences and authorisation conferred by licence (1) The following kinds of licence may be granted and held under this Act: (a) an operator licence, (b) a tattooist licence. (2) An operator licence authorises the licensee to carry on a body art tattooing business (whether on his or her own behalf or on behalf of another person) at the premises specified in the licence in accordance with this Act and the conditions of the licence. (3) A tattooist licence authorises the licensee to perform body art tattooing procedures in accordance with this Act and the conditions of the licence. … 1. Section 11 of the Act provides: 11 Licence applications ... (2) An application for a licence may only be made by an individual. ... (3) An application for an operator licence in connection with a body art tattooing business that is owned or operated by or on behalf of a corporation, partnership or trust must be made by an individual nominated by the corporation, partners or trustees to be the premises manager for the purposes of carrying on that business at the premises for which the licence is sought. … (5) An application for a licence must: … (b1) in addition to the statement required under section 12, be accompanied by copies of 3 forms of personal identification of an approved kind for each individual identified as a close associate in that statement, and (c) in the case of an operator licence: (i) specify the address of the proposed licensed premises, and (ii) specify the names and residential addresses of each staff member employed (or, if no staff members are currently employed, proposed to be employed) to work at the proposed licensed premises, and … 1. Section 4 of the Act defines a "close associate". It provides: 4 Meaning of "close associate" (1) For the purposes of this Act, a person is a "close associate" of an applicant for a licence or a licensee 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 the person's own right or on behalf of any other person), in the business of the applicant or licensee that is or will be carried on under the authority of the licence, 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 management or operation of that business, or (b) holds or will hold any relevant position, whether in the person's own right or on behalf of any other person, in the business of the applicant or licensee that is or will be carried on under the authority of the licence, or (c) is or will be engaged as a contractor or employed in the business of the applicant or licensee that is or will be carried on under the authority of the licence. (2) For the purposes of this section, a financial institution is not a close associate by reason only of having a relevant financial interest in relation to a business. (3) The provisions of this section extend to relevant financial interests and relevant powers even if those interests and powers are not payable, exercisable or otherwise enforceable as a matter of law or equity, but are nevertheless payable, exercisable or otherwise enforceable as a matter of fact. 1. The expression "relevant financial interest" is defined as: "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, or to receive any other financial benefit or financial advantage from the carrying on of the business, whether the entitlement arises at law or in equity or otherwise, or (c) any entitlement to receive any rent, profit or other income in connection with the use or occupation of premises on which the business is or is to be carried on (such as, for example, an entitlement of the owner of the premises at which the business is carried on to receive rent as lessor of the premises). 1. The expression "relevant position" is defined as: "relevant position" means: (a) the position of director, manager or secretary, or (b) any other position, however designated, if it is an executive position. 1. The expression "relevant power" is defined as: "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. 1. Section 12 of the Act requires that an applicant is to provide information regarding each individual identified as a close associate. It states: 12 Statement as to close associates of applicant for operator licence (1) An application for an operator licence must be accompanied by a written statement in the approved form, made by the applicant, specifying: (a) that the applicant has made all reasonable inquiries to ascertain the information required to complete the statement, and (b) the following information about any close associates of the applicant: (i) if the associate is an individual-the individual's name and date of birth, (ii) if the associate is a proprietary company-the name and ACN of the company and the names of its directors and shareholders, (iii) if the associate is any other kind of corporation-the name of the corporation, its ACN or ARBN (if any) and the names of the directors or members of its governing body, (iv) if the associate is a partnership-the trading name of the partnership and the names of the partners (including any silent partners), (v) if the associate is a trust-the names of the trustee or trustees and, if a trustee is a proprietary company or other corporation, the information referred to in subparagraphs (ii) and (iii) concerning its management and shareholders. … 1. Section 14 of the Act provides that when Fair Trading receives a licence application for a licence it is to refer the application to the Commissioner for an investigation and determination as to either or both of the following: (i) whether the applicant is a fit and proper person to be granted the licence, (ii) whether it would be contrary to the public interest for the licence to be granted. 1. In regard to the Commissioner's role, section 19 provides: 19 Commissioner to make security determinations about applicants and licensees (1) If an application for a licence is referred to the Commissioner for investigation under section 14, the Commissioner is to inquire into and determine, and report to the Secretary on, either or both of the following: (a) whether the applicant is a fit and proper person to be granted the licence, (b) whether it would be contrary to the public interest for the licence to be granted. (2) The Commissioner may also investigate and determine, whether at the request of the Secretary or on the Commissioner's own initiative, either or both of the following and report to the Secretary on them: (a) whether a licensee continues to be a fit and proper person to hold his or her licence, (b) whether it would be contrary to the public interest for the licensee to continue to hold his or her licence. (3) For the purpose of making a determination on a matter referred to in subsection (1) or (2), the Commissioner may have regard to any criminal intelligence report or other criminal information held in relation to the applicant or licensee (or a close associate of the applicant or licensee) that: (a) is relevant to the business or procedures proposed to be carried on or performed, or carried on or performed, under the licence, or (b) causes the Commissioner to conclude that improper conduct is likely to occur if the applicant were granted the licence or the licensee continued to hold the licence, or (c) causes the Commissioner not to have confidence that improper conduct will not occur if the applicant were granted the licence or the licensee continued to hold the licence. 1. Section 16(3)(c) of the Act provides that Fair Trading must not grant the licence if the Commissioner has made an adverse security determination in respect of an applicant. 2. Section 20 of the Act provides that neither the Commissioner nor Fair Trading is required to give reasons for determining an application if to do so would disclose the existence or content of any criminal intelligence report or other criminal information as referred to in section 19 (3). 3. The Tribunal has jurisdiction pursuant to section 27 of the Act which provides: 27 Right to seek administrative review from Civil and Administrative Tribunal (1) A person (other than a controlled member of a declared organisation) may apply to the Civil and Administrative Tribunal for an administrative review under the Administrative Decisions Review Act 1997 of the following decisions: (a) the refusal or failure by the Secretary to grant a licence to the person (other than by operation of section 26 (1) (a)), (b) a condition imposed by the Secretary on a licence granted to the person, (c) the suspension or cancellation of a licence granted to the person. ... (3) If an application for a licence was refused or a licence was suspended or cancelled by the Secretary on the ground of an adverse security determination made by the Commissioner about the applicant for the administrative review: (a) the Commissioner (as well as the Secretary) is to be a party to any proceedings in the Civil and Administrative Tribunal for an administrative review of the decision of the Secretary, and (b) the Tribunal is to be provided with a copy of the report of the Commissioner's determination, and (c) the Tribunal is not prevented from determining whether the Secretary made the correct and preferable decision regarding the application or the licence concerned merely because of the determination of the Commissioner. 1. I have discussed the relevant aspects of the regime in several decisions and I have also considered the approach to be adopted when undertaking a review of a decision to refuse an application for a licence under the Act where the refusal is a result of an adverse security determination: see for example the discussion in Smith v Commissioner of Police & Anor [2014] NSWCATAD 184 ("Smith"). In Smith at paragraph [27] – [28] I expressed the view: 27. In my view section 27(3) of the Act is to be construed as giving the Tribunal the jurisdiction to make a fresh determination on the basis of the material placed before it. The Tribunal is not confined to the grounds relied upon by the Commissioner in making the adverse security determination. 28. The Tribunal may make its decision on any other lawful, discretionary basis. In doing so there is no need to revisit the adverse security determination. Pursuant to section 27(3)(a) of the Act the Commissioner is a party to the proceedings. The Commissioner is able to present material and argument in relation to the matter to be determined. The Commissioner is able to present criminal intelligence reports or other criminal information to the Tribunal and subsections 27(4), (4A) and (4B) of the Act provide safeguards in relation to that material. 1. This approach was accepted by the Appeal Panel in Austin v Commissioner of Fair Trading & Commissioner of Police [2016] NSWCATAP 179 at paragraphs [37] – [38]. 2. In my view, the Tribunal stands in the shoes of the Commissioner for the purposes of these proceedings, and in making its decision the Tribunal is entitled to have regard to and give weight to any material which the Commissioner was entitled to consider and give weight. This material might include relevant criminal intelligence report or other criminal information held in relation to an applicant or a close associate of an applicant. The relevant material can also include any material that has come into existence, or discovered, after the date of the Commissioner's decision: Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577. 3. The grounds for refusal available under the Act include, but are not limited to, grounds that the Applicant is not a fit and proper person, or that it is not in the public interest for the licence to be granted. 4. In the present matter, the Commissioner contends that the Tribunal should affirm the decision not to grant the Applicant the licences that she seeks. It submits that the Tribunal should find that it is not in the public interest for the licences to be granted, or alternatively, that the Applicant is not a fit and proper person to hold the licences. 5. The Commissioner's delegate determined under section 19(1) of the Act that it would not be in the public interest for the Applicant to be granted the operator licences. The Delegate came to that view having regard to information concerning Sasha. 6. The Commissioner contends that Sasha is a close associate of the Applicant and refers to factual matters concerning Sasha that were canvassed in the decision in Mielczarek v Commissioner of Police and Commissioner for Fair Trading [2016] NSWCATAD 34 ("Sasha's matter"). In his decision in Sasha's matter, Senior Member Walker affirmed the decision to refuse Sasha a tattooist licence. Senior Member Walker found that Sasha was a fit and proper person to hold a licence notwithstanding his membership of the Rebels Motorcycle Club ("the Rebels"). However, he concluded that it was not in the public interest for Sasha to be granted a licence. Sasha's continued membership of the Rebels was a factor in that decision. However, it was only one factor, together with other factors which were of concern in respect of the public interest. "Fit and proper person" 1. The Act contains no objects clause, but the Tribunal may have regard to the Minister's second reading speech to ascertain the purpose of the legislation, the mischief that it was designed to cure. The second reading speech noted that the Act was introduced in response to gang crime in New South Wales. It aims to break the stranglehold that outlaw motorcycle gangs ("OMCGs") had over the tattoo industry. However, the Act's purpose is not limited to eradicating the influence of OMCGs in the industry. The "fit and proper" criterion applied in the Act is of much broader application. 2. I reviewed a number of relevant authorities that considered the meaning of the expression "fit and proper person" in Smith at paragraphs [38] to [41]. The assessment of fitness and propriety is a question of fact to be decided objectively in relation to the activities in which the applicant, if licensed, would be engaged. It has been held to involve three qualities, integrity, knowledge and ability (Hughes and Vale Pty Ltd v New South Wales (No. 2) (1955) 93 CLR 127 at 156 – 7. 3. In Sobey v Commercial and Private Agents Board (1979) 22 SASR 70, 75, Walters J stated: In my opinion what is meant by that expression is that the applicant must show not only that he is possessed of the requisite knowledge of the duties and responsibilities evolving upon him as the holder of a particular licence … but also that he is possessed of sufficient moral integrity and rectitude of character as to permit him to be safely accredited to the public … as a person to be entrusted with the sort of work which the licence entails. 1. As Senior Member Walker noted in Sasha's matter, in the context of the Act, unfitness can be indicated by criminal associations, habitual recidivism, formal or informal links with OMCGs, failure to implement proper tattooing practices and general disregard for the law. 2. Factors relevant to fitness and propriety include the nature, seriousness and frequency of any criminal offences for which the applicant has been arrested or convicted; the applicant's reputation in the community; and the likelihood that the applicant will reoffend, be the subject of further complaints or commit further offences. Assessing an applicant's fitness and propriety is thus an evaluative process that gives the decision-maker wide scope for judgment and allows broad bases for rejection. The public interest 1. The decision-maker is required to weigh up whether it would be contrary to the public interest for the licence to be granted. This requires consideration of both public and private interests: See discussion in Mielczarek v Commissioner of Police, NSW Police Force (No 2) [2016] NSWCATAP 255 at paragraphs [15] – [28]. In Comalco Aluminium (Bell Bay) Ltd v O'Connor (1995) 131 ALR 657, 681 Wilcox CJ and Keely J said: "The purpose of the reference to 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 Commissioner's consideration. The effect of the reference is to amplify the 'scope and purpose' of the legislation". 2. The discretion to make a decision "in the public interest" is confined only by the scope and purpose of the legislation itself: O'Sullivan v Farrar [1989] HCA 61; (1989) 168 CLR 210, 216. Applying a public interest test is a question of fact and degree: Re Queensland Electricity Commission; ex parte Electrical Trades Union of Australia (1987) 72 ALR 1, 5. 3. In Director of Public Prosecutions v Smith [1991] VicRp 6; [1991] 1 VR 63, 75, the court held: The public interest is a term embracing matters, among others, of standards of human conduct and of the functioning of government and government instrumentalities tacitly accepted and acknowledged to be for the good order of society and for the well-being of its members. The interest is therefore the interests of the public as distinct from the interest of an individual or individuals. 1. The Appeal Panel pointed out in Commissioner of Police v Toleafoa [1999] NSWADTAP 9 at paragraph [25] that "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". 2. It is also well settled that an applicant's personal interest in retaining a licence cannot outweigh the public interest in having full confidence in the professionalism of people involved in the relevant industry: Blisset v Commissioner of Police, New South Wales Police Service [2006] NSWADT 114 at paragraph [32]. 3. The Appeal Panel explained in Constantin v Commissioner of Police, New South Wales Police Force (GD) [2013] NSWADTAP 16 at paragraph [33] that the 'public interest' allows for issues going beyond the character of the applicant to be taken into account. These may include concerns in relation to public protection, public safety and public confidence in the administration of the licensing system. The Issues in this matter 1. In the present case the regulated activity is that of a tattoo business operator. The issues to be determined are (i) whether the Applicant is a fit and proper person to be granted the operator licences, and (ii) whether it would be contrary to the public interest for the licences to be granted. 1. It is Sasha's fitness and propriety to be involved in the activity and his relationship to the Applicant and the businesses which are the basis of the Commissioner's concerns. However, the Commissioner also contends that Sasha is a close associate of the Applicant for the purpose of section 4 of the Act and therefore the Applicant was required to provide the information required under section 12(1)(b) of the Act. The Commissioner argues that her failure to provide the required information in relation to Sasha reflects on her fitness and propriety. 2. The issues for determination are therefore based on the question as to whether or not Sasha is, or was, a close associate of the Applicant. The evidence 1. The Respondents rely on the adverse security determination and the annexures to that determination. The Applicant was given a redacted version of that material and the unredacted version was provided to the Tribunal on a confidential basis. The Commissioner's confidential evidence and confidential oral submissions were given in closed session from which the Applicant and her representatives were excluded. 2. The Commissioner sought and was granted leave to rely on material from Sasha's matter. The Commissioner relies on both open and confidential material. This material includes evidence that Sasha gave regarding his involvement with the businesses at the parlours, his involvement with the Rebels and his knowledge in regard to a drive-by shooting at premises located next to the Picton Parlour and a murder/suicide of two members of the Rebels that occurred in Picton shortly afterwards. Senior Member Walker discussed this material in some detail in his decision in Sasha's matter. I adopt his summary of Sasha's evidence in that matter. 3. The Applicant relies on her own evidence. She provided a statement and also attended the hearing and was cross-examined. 4. Sasha also attended the hearing and was cross-examined. Evidence in relation to Sasha 1. It is common ground that Sasha was previously involved in the conduct of the business at both the Picton Parlour and the Bowral Parlour. The extent of his involvement is in dispute. 2. In her affidavit sworn 27 October 2015 the Applicant stated: I can only presume that the Commissioner's determination is made on the basis that my former husband joined the Rebel's Motorcycle Club approximately 17 years ago. For his part, it is worth noting that he himself has little or no criminal record (apart from a drink drive matter in or about 2005) and has in fact held a Motor Dealers Licence since 1995 which he continues to hold. I have spoken to my ex-husband about the matter and he has indicated to me he is prepared to not be involved in the running of the businesses until this matter is determined on a final basis. Further, I propose to issue a directive to staff that all matters relating to the running of the businesses on a day to day basis are to be referred solely to me. 1. In her affidavit sworn 16 March 2016 the Applicant stated: On 22 February 2016 Senior Member Professor G. Walker handed down his decision in the matter of Mielczarek v Commissioner of Police NSW Police Force and Commissioner of Fair Trading [2016] NSWCATAD 34. That matter involved a review of a decision of a delegate of the second Respondent to refuse to grant to my ex-husband Alexander Gustav Mielczarek, a tattooist licence under the Tattoo Parlours Act 2012. Ultimately Senior Member Professor G. Walker determined that whilst the Applicant was a "fit and proper person" that it would be "contrary to the public interest" for the Applicant to be granted the licence that he was seeking and affirmed the decision under review. Following that decision my ex-husband and I have had discussions in relation to our family law property settlement and the future operation of the businesses. As a result of those discussions we have resolved as follows: a. I will continue to operate the businesses to the exclusion of any involvement by my ex-husband; b. Our family law property settlement will proceed on the basis that I will be declared to be the sole legal and beneficial owner of the businesses, at a value to be agreed, or failing an agreement being reached as determined by an independent Valuer, with my ex-husband to receive a share of the matrimonial pool equivalent to this amount. c. Each of us will instruct our respective lawyers to prepare documents (either by way of Binding Financial Agreement or Consent Orders) under the Family Law Act 1975 to give effect to the above once we have reached an agreement on a final division of the matrimonial pool. Since 27 October 2015 when this Honourable Tribunal granted the stay, my ex-husband has had no involvement in the running of the business, nor has he attended either of the business premises. 1. The Commissioner relies on a number of aspects of the evidence that Sasha gave in the hearing of an application for a stay of the determination to refuse to grant his application for a tattooist licence and in the hearing of the substantive matter. Some of Sasha's evidence regarding his involvement with the businesses at the parlours is in conflict with that given by the Applicant in this matter. 2. In his affidavit of 23 September 2015 he stated: In about 2008-09 I opened Picton Tattoos with Dawn. We opened a second office at Bowral. When we opened the Bowral office we changed the name to Picton and Bowral Cosmetic Tattoos. The businesses are still running today as Dawn also has a licence. Dawn now wants to withdraw from the business since the divorce. If I do not have a licence and Dawn does withdraw then I will have to close the two businesses. … Before my property settlement I had five (5) businesses. … Currently my only source of income is from the tattoo shops. 1. Under cross-examination in relation to his financial circumstances at the hearing before me on 24 September 2015 he stated that "now tattooing is my main – only thing" and that he was performing one to two tattoos per day. He said that he regarded those working in the parlours as like family. He said that: "When I was going through my divorce I went to work because that's my new family. That's my family. That was my soul. That was my saviour – was work." 1. At the hearing on 4 November 2015 before Senior Member Walker the following exchange took place: Q. Sir, most of your business life is referred to in your first affidavit except - 23 September - but with regards to your current income what's your current income at the moment- A. Nil. Q. -since you've been able to? A. Nil, I'm not allowed to go work, I'm not allowed to tattoo and I'm not allowed to go anywhere near the shops or associate with anybody and so I've got nil income. SENIOR MEMBER WALKER Q. So if you were working where would you be working if you did have a licence? A. Well this is where I was going ask if I could go back to my shops and go on some sort of a trial just to prove myself which I've already had, you know. Q. So who's running the shops at the moment? A. My ex-wife, yeah, and my son. Q. Is it intended that arrangement will continue? A. No, my wife doesn't want to work in - while she's got a new partner. She's moved away, she's moved down to Wollongong and she wants a clean break. I have to give her a substantial amount of money from another investment property we had which is a million dollars and I - the rest of the money 1.6 million I've got to pay 330,000 capital gains tax, 160,000 GST along with 200 grand I've paid in the last 18 months for nearly 200,000 in business taxes in five companies that I have. DOYLE Q. So with regards to this property settlement with your wife the agreement hasn't been formalised as yet has it? A. No. Q. So with regards to the informal agreement who is doing that with your tattoo parlours? A. My son and I or me- Q. So you need to get the appropriate licences? A. Yes, I do. Q. And so that's the current plans, for you to get the appropriate licences and take over the control? A. Yes, and my wife gets the property, a $750,000 unit and a million dollars cash and her vehicle along with another company called Sadajach which there was $50,000 in that she's - that's her settlement. The settlement will go through on I think it's 6 January is the settlement date and that's when everything goes to court. Q. It causes a problem for you if you're not able to be appropriately licenced to take over the business? A. Yes, she will benefit more than I will, yes, and I'll be losing - I'll just, yeah, all I'll have is the house and no money at all. 1. In regard to his involvement with the Rebels Sasha stated: Before I joined the Rebels I was working seven (7) days per week. I had a group of mates at the time who also enjoyed riding bikes. We would make plans to go on riding holidays together, however, they never came off as when it came time to commit and pay for accommodation they would become unavailable to go so the holidays never came off. My ex-wife Dawn suggested to me that I should join the Rebels as it was a club rule for members to go on the Club's organised runs and I had similar interest in car building custom cars and bikes. As a result I joined the club in 1999. In my time in the club, on various trips, I rode around Australia. The Club has taken me to places I would never have gone to and seen. Over the years the members of the Rebels I involved myself with were the car and bike enthusiast. I never involved myself in drug use or any criminal activities of any of the club members. I have always kept my distance from those members who I thought may be involved in criminal activities. As my position was known no one would approach me with regard to any criminal activity. I would sell cars and bikes to members but that was done on a legitimate basis and the sales went through my police books at the caryard. Those police books would be checked from time to time by members of the Department of Fair Trading when they did their regular checks. Over the years I have made friends through the club. Over the years the club has changed as it grew. I did not agree with many of the new members that were being brought into the club. However, I had my own small chapter at Bargo with about four members. I would avoid going to the Bringelly Club house as I was not interested in the politics. I would only go to the Bringelly club house once per month for the compulsory monthly meeting. Over the past few years the police have arrested those who were committing crimes and many of those members are now in prison. There are now no club meetings. The Bringelly club house is closed and is leased out to a trucking company. I asked an officer from Raptor about what would happen if I left the club. I was told that it wouldn't make no difference as I would be seen as a close associate. In any event the Club no longer functions. The Club president Alex Vella is no longer in Australia. There are no meetings. There are no rides. As far as I am concerned the club is finished. It is only a matter of time before there is an announcement that the Rebels no longer exist. I appreciate that the police have done an excellent job in arresting those members who were involved in criminal activity. My only concern in announcing that I am no longer a member is what happened to a former member who was a chapter president. He, like me, has some assets. It has been reported that after he resigned he was kidnapped, bashed unconscious, hog tied and had his nipples slit with a knife by some of the newer members. I am concerned that this could happen to me or a member of my family if I make a formal announcement of resignation. What the Club became is not the Club that I joined. It evolved and I do not like the way it had evolved. 1. In his decision in Sasha's matter, Senior Member Walker set out a number of issues that are of concern to the Commissioner. These included issues related to in Sasha's membership of the Rebels. 2. [Not for publication] 3. [Not for publication] 4. [Not for publication] 5. [Not for publication] 6. [Not for Publication] 7. [Not for Publication] 8. [Not for Publication] 9. [Not for Publication] 10. [Not for Publication] 11. [Not for Publication] 12. [Not for Publication] 13. [Not for Publication] Sasha's evidence in this matter 1. Sasha attended the hearing and was cross-examined. In some respects his evidence in regard to the role he has played in the businesses in the past is quite different to that of the Applicant and it is also different to that evidence which he gave on the earlier occasions. The Commissioner has provided the transcripts of evidence and affidavits that he gave in earlier hearings and has highlighted many of those differences. Sasha does not dispute that he made negative comments about the Applicant's ability to operate the businesses but now says that he regrets making those comments. 2. Sasha also sought to play down his earlier evidence in regard to the role that he played in the businesses. For example, he clarified the earlier evidence that he had gone to work every day as a reference to work in various businesses, not just work in the tattoo businesses. He does not dispute that he went to the parlours on a daily basis but now says that he attended mainly for the company of his son Jay and other members of the staff. He regarded the staff as family and he accepts that he regarded himself as the head of the family. However, his evidence now is that he was not needed to run the businesses and that the opinion that he had of his importance to the businesses was probably exaggerated. 3. Sasha's evidence in regard to the current situation with the businesses does not differ significantly from that of the Applicant. He does not dispute that he and the Applicant started the businesses together and that he was actively involved in the conduct of the businesses. He does not dispute that he had intended to take control of the businesses as a component of the Family Law property settlement with the Applicant. However, his evidence is that he now accepts that he is unable to work in the tattoo industry. He has been forced to reconsider his options in light of the refusal of his licence application. He and the Applicant have renegotiated the property settlement in light of that refusal. While he had previously intended to take over the businesses, he and the Applicant have now agreed that the Applicant will do so. The Applicant's evidence 1. The Applicant agreed that she had completed the application forms and that she did not include Sasha's details as a close associate. Her evidence is that this was because she regarded Sasha as her husband, not as an associate. She thought that she only needed to include details of people who held positions in the businesses and people from outside the family who stood to gain financially from the business. She said that if Sasha had been earning a wage she would have included him on the application forms. 2. When she completed the application forms she regarded herself as the sole director and the sole manager. She agreed that Sasha used to go to the businesses and help out. They had started the businesses together and he helped out when he wasn't busy elsewhere. She also agreed that Sasha was often at the Picton Parlour because his son worked there. He was at the parlour when Police visited in March 2015. She said that at that time there was no reason for him to not be at the parlour, that he was there a lot and that the Police used to ask for him when they visited. She does not deny that he was signing documents on behalf of the business. She said that she and Sasha had started the businesses together and that Sasha has had difficulty in letting it go. 3. She said that at an earlier stage of these proceedings she had been prepared to walk away from the business. Before the stay was granted she found it too difficult to deal with Sasha and so she stayed away from the parlours. However, circumstances have changed and Sasha is now not able to take control of the businesses. Sasha no longer attends as a result of the condition of the stay. 4. She said that she subsequently decided not to walk away from the businesses because of her children and the fact that she found it easier to run the businesses without Sasha's involvement. She is now looking forward to it and has plans to invest in new laser equipment. She works at the Picton Parlour three days each week and one day each week at the Bowral Parlour. Her son Jay is at the Picton Parlour most days but spends one day each week at the Bowral Parlour. She has a manager at the Bowral Parlour. 5. In her affidavit sworn on 16 March 2016 the Applicant stated: On 22 February 2016 Senior Member Professor G.Walker handed down his decision in the matter of Mielczarek v Commissioner of Police NSW Police Force and Commissioner of Fair Trading [2016] NSWCATAD 34.That matter involved a review of a decision of a delegate of the second Respondent to refuse to grant to my ex-husband Alexander Gustav Mielczarek, a tattooist licence under the Tattoo Parlours Act 2012. Ultimately Senior Member Professor G.Walker determined that whilst the Applicant was a "fit and proper person" that it would be "contrary to the public interest" for the Applicant to be granted the licence that he was seeking and affirmed the decision under review. Following that decision my ex-husband and I have had discussions in relation to our family law property settlement and the future operation of the businesses. As a result of those discussions we have resolved as follows; a. I will continue to operate the businesses to the exclusion of any involvement by my ex-husband; b. Our family law property settlement will proceed on the basis that I will be declared to be the sole legal and beneficial owner of the businesses, at a value to be agreed, or failing an agreement being reached as determined by an independent Valuer, with my ex-husband to receive a share of the matrimonial pool equivalent to this amount. c. Each of us will instruct our respective lawyers to prepare documents (either by way of Binding Financial Agreement or Consent Orders ) under the Family Law Act 1975 to give effect to the above once we have reached an agreement on a final division of the matrimonial pool. Since 27 October 2015 when this Honourable Tribunal granted the stay, my ex-husband has had no involvement in the running of the business, nor has he attended either of the business premises. 1. The Applicant said that Sasha only had power to deal with third parties on behalf of the businesses if she gave him that power. She agreed that takings from the businesses were deposited in a joint account with Sasha and that some funds were used towards expenses incurred in Sasha's other businesses. 2. The Applicant denies that there is any association between the businesses and the Rebels. She conceded that there would be a perception that Sasha is associated with the Picton Parlour and that he is a large personality in the community. Is Sasha a Close Associate? 1. It is not in dispute that the Applicant and Sasha started the Picton and Bowral parlours together. Nor is it in dispute that Sasha was heavily involved in the businesses for a long period. The question that arises is whether or not he was a close associate at the time that the Applicant lodged her licence applications. 2. In my view he was a close associate at that time and the Applicant should have identified him as such. 3. There is a significant amount of evidence showing that Sasha acted in a way that held him out to be an owner or manager of the businesses, at least in regard to the Picton Parlour. His own evidence is that he regarded himself as the owner of the businesses - either on his own or jointly with the Applicant. It is also apparent that he was regarded by others as the owner of the businesses. 4. In contrast, the Applicant regarded herself as the owner of the businesses from the time that she became the sole director. In her opinion, Sasha was only able to act on behalf of the businesses if she allowed him to do so. However, when viewed objectively, the Applicant's opinion that she was the sole manager does not appear to more than a theoretical position and does not reflect the reality of the business operations. 5. I accept that she regarded herself as the owner of the businesses but it is clear that Sasha also regarded himself as the owner of the businesses. 6. As noted above, the term 'close associate; is defined in section 4 of the Act. The definition is broad. The concept of "close associate" was considered in the context of the Security Industry Act 1997 in AVS Group Pty Ltd v Commissioner of Police, NSW Police Force [2012] NSWADT 1. I stated at paragraphs [107] – [110]: "107. In the circumstances of a family business arrangement, directors commonly are formally appointed. However, it is less likely that individuals will be formally appointed to other roles within a family business than in the wider commercial sphere. 108. ... The use of the words "manager, and other executive positions and secretary, however those positions are designated" in section 5 of the Act suggests to me that the legislature intended that an official title is not conclusive of the issue. The actual role played by an individual must be considered to determine whether or not the duties can reasonably considered as falling within the scope of one or more of those positions. 109. It is not necessary that the Commissioner establish that Peter "held" a "relevant position" in the business of AVS GA in the legally relevant sense. It is sufficient if the Commissioner establishes that Peter exercised the functions of such a position without having been formally appointed. 110 That construction of the provision promotes the purpose of the Act to prevent persons who are not fit and proper to hold a licence from acting on behalf of a security business." 1. This approach was upheld in the Appeal Panel in AVS Group Australia v Commissioner of Police (no 2) [2014] NSWCATAP 53 at paragraph [361]. 2. As I noted in Stiles v Commissioner for Fair Trading & Commissioner of Police, NSW Police Force [2016] NSWCATAD 30 at paragraph [25], it is my view that those comments are equally applicable when considering whether a person is a 'close associate' for the purposes of the Act. 3. In my view, Sasha was clearly acting in a managerial role in the businesses at the time that the Applicant lodged her applications. In my view Sasha held a "relevant position" in the businesses notwithstanding that he may not have held a formal position or that he was not receiving a salary. Therefore, he was a close associate at that time and the Applicant should have identified him as such. 4. [Not for publication] Whether or not the Applicant is a fit and proper person to hold the licence 1. In order to assess the question of whether or not the Applicant is a fit and proper person to hold the licence she seeks, I need to consider her honesty, knowledge and ability to undertake the responsibilities that are provided for by such a licence. The only issue in regard to her fitness and propriety is related to her failure to disclose Sasha as a close associate. 2. The Commissioner has pointed to this failure as evidence of lack of honesty. However, I am not satisfied that the Applicant has deliberately withheld the information. I accept that she considered the businesses to be her businesses. I also accept that she understood that the requirement to disclose a "close associate" related to non-family members and those who held designated positions. Her understanding of her obligations in this regard was incorrect. 3. In some circumstances a lack of knowledge of the regulatory scheme could lead to a finding that an applicant was not fit and proper to hold a licence. I do not agree that that is the case in this matter. I have no basis on which I could form the view that the Applicant does not have sufficient knowledge to allow her to conduct the businesses in accordance with the requirements of the legislation. 4. In the circumstances, I do not consider that this failure to disclose Sasha as a close associate should prevent the Applicant from holding the licence that she seeks. Has Sasha ceased to be a close associate? 1. The question therefore arises as to whether or not Sasha has ceased to be a close associate. 2. Both the Applicant and Sasha gave evidence that they needed to reconsider their positions in regard to the businesses after Sasha's licence application was unsuccessful. Both gave evidence that they had intended that Sasha would take over the businesses and that the Applicant would walk away. However, in light of the refusal of Sasha's licence application it became apparent that the value of the businesses would be significantly affected if the Applicant walked away. 3. In light of that reality, it was agreed that the Applicant would take over the businesses and that Sasha would walk away. Sasha's evidence is that he has done so. The Applicant gave evidence that Sasha has not been involved in the conduct of the businesses or attended the business premises since the determination was stayed on 27 October 2015. 4. There is no evidence that Sasha has attended the business premises since that time. 5. [Not for Publication] 6. [Not for Publication] 7. In the circumstances, I am satisfied that Sasha ceased to be a close associate at least from the time that he entered into an agreement with the Applicant that the Applicant would take over the businesses and that Sasha would walk away from the businesses. I accept that that agreement was in the terms set out in the Applicant's affidavit sworn on 16 March 2016. 8. Therefore, Sasha is no longer a close associate for the purposes of the Act. 9. On the evidence before me, I am satisfied that Sasha was a close associate at the time that the determinations to refuse that licence applications were made. I am also satisfied that the determinations to refuse that licence applications were correct at the time that they were made. This is essentially for the same reasons given by Senior Member Walker in his decision in Sasha's matter. Is it not in the public interest for the Applicant to hold the licences? 1. Having formed the view that Sasha is no longer a close associate, I must consider whether there are public interest considerations that would prevent the Applicant from holding the licences that she is seeking. 2. The Commissioner has raised a number of factors that it considers support its view that it is not in the public interest for the Applicant to hold the licences. These include: 1. the Applicant's failure to disclose Sasha as a close associate; 2. the fact that Sasha was a co-founder of the businesses, has been a significant influence on staff, and is a senior well-known member of the Rebels; 3. the public perception that Sasha is associated with the parlours and there is therefore a corresponding perception that the parlours are associated with the Rebels; 4. the fact that Sasha is a strong personality and the Applicant's control over the businesses has always been dependent on Sasha allowing it. If Sasha wanted to become involved in the businesses again, the Applicant may allow him to take control; 5. the need to take account of the free enterprise of other businesses. A parlour that is perceived as having an association with an OMCG can hinder the reputation of truly independent parlours in a similar location or their ability to operate competitively; and 6. there is a need to maintain public confidence in the licensing system. The Tribunal must consider how public confidence in the scheme could be damaged if the licences are granted. The Applicant's personal interest cannot outweigh the public interest. 1. The Applicant points to the fact that Senior Member Walker found that Sasha is a fit and proper person to hold a tattooist licence. Further, she does not accept that Sasha had a managerial role after 2012 when the company was incorporated with the Applicant as sole director. Rather, she says that Sasha performed discrete roles as her agent. 2. Mr Allen submitted that there is no evidence to suggest that the Applicant is dishonest and there is no evidence to suggest that she is associated with the Rebels. She is playing an active role in the businesses and her son Jay also has a managerial role. Sasha has accepted that the Applicant is competent in her role with the businesses and there is nothing to suggest that Sasha is standing over the Applicant or that he will attempt to resurface as controller of the businesses. 3. Mr Allen submitted that there is therefore no void in the conduct of the businesses that Sasha might be expected to fill. 4. I have considered the evidence and the arguments presented by the parties in regard to the public interest. I agree with the Commissioner that the evidence suggests that Sasha is a strong personality and that in the past this has influenced the Applicant's behaviour towards the businesses. I accept the evidence of Sasha's association with the Rebels and I also accept that it is probable that there has been a public perception that Sasha is associated with the Picton Parlour. It is also possible that there has been a public perception that the Rebels are associated with the Picton Parlour. It is reasonable to anticipate that such a perception might continue and if this were the case there could be implications in regard to the freedom of other businesses to establish in competition to the Picton Parlour. There could also be implications in regard to the maintenance of public confidence in the licensing system if that were to persist. 5. However, it is also reasonable to anticipate that in a small country town the public would soon become aware of the changed situation and the fact that Sasha's licence application was unsuccessful. 6. As has been noted, Senior Member Walker found that Sasha is a fit and proper person to hold a tattooist licence. In light of that finding it is reasonable to anticipate that he would abide by the rulings of the Tribunal. It is also reasonable to anticipate that the local police would be made aware of any irregularities in that regard very quickly. 7. It is not possible to say that there is no risk to the public interest. However, in the circumstances I am not satisfied that the risks are such that they should prevent the Applicant holding the licences that she is seeking. 8. It follows, in my view, that the correct and preferable decision is to set aside the Commissioner's determinations. In their place the decision should be made that the licences be granted. Orders 1. The decisions under review are set aside. 2. The decision is made that the licences are granted. ********** 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: 04 January 2017