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Wednesday 15 May 2019

19-116MR High Court delivers judgment in broker's appeal from the Full Federal Court

The High Court of Australia has upheld an appeal from a decision of the Full Court of the Federal Court brought by former Victorian finance broker Rudy Noel Frugtniet.

The appeal concerned how provisions in the Crimes Act 1914 (Cth) that allow courts and tribunals to consider spent convictions for the purposes of making a decision, apply to the Administrative Appeals Tribunal (AAT) when reviewing banning decisions made by ASIC. Spent convictions are generally those where 10 years has passed since a person was convicted, and the person was not imprisoned for more than 30 months in respect to that conviction. 

The High Court found that the AAT erred by taking into account spent convictions in reviewing ASIC’s decision to permanently ban Mr Frugtniet from engaging in credit activities. The judgment makes clear that the AAT is subject to the same constraints as ASIC when reviewing ASIC banning decisions, and must not take into account considerations which ASIC is forbidden from taking into account.

In making this decision the High Court over-ruled decisions made by the Federal Court and the Full Court of the Federal Court, following earlier appeals brought by Mr Frugtniet.

The AAT is now required to hear the matter again, taking into account the High Court’s decision.  ASIC’s decision to permanently ban Mr Frugtniet from engaging in credit activities (14-163MR) remains on foot pending redetermination by the AAT of Mr Frugtniet’s application for review.

Download the High Court's decision


On 26 June 2014, ASIC permanently banned Mr Frugtniet, a former director of Unique Mortgage Services Pty Ltd, from engaging in credit activities under section 80 of National Consumer Credit Protection Act 2009 (Cth) on the basis that he was not a fit and proper person to engage in credit activities. ASIC’s decision was based on Mr Frugtniet’s lack of full disclosure and misleading answers given in relation to questions on UMS’ application for a credit licence.  ASIC is prohibited from taking into account spent convictions when making banning decisions and did not do so in this matter (refer: 14-163MR).

On 6 March 2015, the AAT found that the permanent banning order of Mr Frugtniet was the correct and preferable decision (refer: 15-049MR).

On 7 April 2015, Mr Frugtniet filed a Notice of Appeal with the Federal Court of Australia in relation to the decision of the AAT. On 22 August 2016, the Federal Court dismissed Mr Frugtniet's appeal (refer: 16-264MR).

On 12 October 2017, the Full Court of the Federal Court dismissed Mr Frugtniet's further appeal (refer: 17-354MR).

On 17 August 2018, Mr Frugtniet was granted leave to appeal to the High Court. On 7 February 2019, the High Court heard Mr Frugtniet’s appeal.

Editor's note:

Mr Frugtniet’s application for review of ASIC’s decision was remitted to the AAT and heard between 17 February 2020 and 3 August 2020. The AAT’s decision is reserved.

Editor's note 2:

On 1 September 2021, the AAT dismissed Mr Frugtniet’s application, made during the hearing of his application for review of ASIC’s decision, that the AAT recuse itself from further involvement in the matter. Mr Frugtniet has the right to appeal the dismissal of his application for recusal.

The AAT’s decision on the substantive application is reserved.

Last updated: 15/05/2019 12:00