Background
Kevin Shari, one of several investors who suffered losses in the Lion Property Group collapse, applied in September 2025 under the Scheme for Compensation for Detriment caused by Defective Administration (CDDA Scheme) to the Minister for Financial Services. Shari alleged that ASIC (the Australian Securities and Investments Commission) had engaged in defective administration by failing to investigate investor complaints, exercise its enforcement powers, and prevent unlicensed fundraising over multiple years, despite a Supreme Court of Victoria finding that Lion Property Group operated an unlicensed scheme without an appropriate financial services license.
The Treasury responded in October 2025 that neither the Minister nor Treasury could determine CDDA Scheme claims relating to ASIC. On 23 December 2025, the Treasury’s Acting Chief Counsel decided that no compensation was payable. Shari then filed an originating application in the Federal Court seeking a declaration that Treasury had unlawfully failed to consider his material and an order of mandamus requiring Treasury to properly consider it.
At the interlocutory hearing on 19 May 2026, Shari failed to appear. The Court dismissed his application subject to reinstatement if he sought it by 28 May 2026. Shari applied to reinstate, citing misunderstanding and post-traumatic stress disorder. The respondent consented, and the matter was relisted for 11 June 2026 for the summary dismissal application.
The Court’s Holding
Justice Hespe dismissed the proceeding pursuant to s 31A(2) of the Federal Court of Australia Act 1976 (Cth). The case turned on two fundamental threshold issues: (1) whether ASIC is subject to the CDDA Scheme, and (2) whether any person is authorized to make decisions under the CDDA Scheme in respect of ASIC.
On the first issue, while the Court accepted it was at least arguable that ASIC is subject to the CDDA Scheme (as a non-corporate Commonwealth entity for finance law purposes under the Public Governance, Performance and Accountability Act 2013), this did not resolve the fatal flaw in Shari’s case. The Court found that there is no officer of ASIC currently authorized to consider and decide applications under the CDDA Scheme. Moreover, although ASIC falls within the Treasury portfolio, s 12(3) of the ASIC Act prohibits the Minister from directing ASIC about “a particular case,” creating a statutory barrier to ministerial or delegated consideration of CDDA claims about ASIC’s specific actions. The Treasury officers who hold CDDA authorization under the 2023 instrument are authorized only for “general Treasury matters,” which excludes matters relating to ASIC specifically.
The Court acknowledged that a decision-maker vested with executive power to decide a CDDA Scheme claim might be required to exercise that power in a legally reasonable manner (including by considering all material submitted), but this theoretical duty could not rescue Shari’s claim because no such authorized decision-maker existed to breach it. Summary dismissal was therefore appropriate.
Key Takeaways
- The CDDA Scheme is a non-statutory executive policy outside the scope of the Administrative Decisions (Judicial Review) Act 1977, but decisions under it are potentially amenable to judicial review under s 39B of the Judiciary Act 1901 on grounds of legal unreasonableness (following Davis v Minister for Immigration [2021] FCAFC 213).
- ASIC is arguably a “non-corporate Commonwealth entity” subject to the CDDA Scheme for purposes of the scheme itself, despite being a body corporate under the ASIC Act, because s 8(1A) of the ASIC Act deems it a non-corporate entity for finance law purposes.
- No officer is currently authorized to decide CDDA Scheme claims relating to ASIC; authorizations granted to Treasury officers apply only to “general Treasury matters” and expressly exclude ASIC-specific matters.
- Section 12(3) of the ASIC Act, which prohibits ministerial direction about “a particular case,” creates a statutory barrier preventing ministerial or Treasury-delegated consideration of CDDA claims alleging defective administration by ASIC.
- Procedural fairness requirements within the CDDA Scheme (including consideration of all submitted materials) may be enforceable as aspects of legally reasonable decision-making, but only if an authorized decision-maker exists.
Why It Matters
This decision reveals a structural gap in the CDDA Scheme framework. Investors harmed by alleged ASIC regulatory failures face a procedural dead-end: ASIC itself cannot consider CDDA claims; no Treasury officer is authorized to consider them; and the Minister is statutorily barred from directing ASIC on particular cases. The protective legislative purpose of s 12 of the ASIC Act—preventing ministerial interference with ASIC’s independence—inadvertently forecloses a compensation remedy for victims of ASIC’s own defective administration.
For practitioners advising clients injured by regulatory failure, the decision makes clear that the CDDA Scheme provides no relief for ASIC-related complaints unless and until an authorized decision-maker is formally appointed. The judgment also clarifies that while CDDA decisions may be subject to judicial review for legal unreasonableness, success requires both an authorized decision-maker and a failure to exercise power reasonably. Here, the court did not reach Shari’s arguments about the Treasury’s failure to consider his supporting materials (a USB containing additional evidence) because the threshold jurisdictional defect was insurmountable.