Australian Securities and Investments Commission v One Tech Media Limited
[2016] FCA 1580
•23 December 2016
FEDERAL COURT OF AUSTRALIA
Australian Securities and Investments Commission v One Tech Media Limited [2016] FCA 1580
File number: VID 848 of 2016 Judge: DAVIES J Date of judgment: 23 December 2016 Catchwords: PRACTICE AND PROCEDURE – application for direction in respect of the Australian Securities and Investments Commission – whether appropriate to make direction that the Australian Securities and Investments Commission make a request of a foreign regulator Legislation: Australian Securities and Investments Commission Act2001 (Cth)
Corporations Act 2001 (Cth)
Date of hearing: 14 December 2016 Registry: Victoria Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 35 Counsel for the Plaintiff: N Moncrief Solicitors for the Plaintiff: Australian Securities and Investments Commission Counsel for the Fourth, Seventh and Ninth Defendants: A Herskope Solicitors for the Third to Eleventh Defendants: Kalus Kenny Intelex ORDERS
VID 848 of 2016 BETWEEN: AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION
Plaintiff
AND: ONE TECH MEDIA LIMITED
First Defendant
ULTRA SOLUTIONS MG (UK) LIMITED
Second Defendant
ALLIANZ METRO PTY LTD (ACN 610 042 843) (and others named in the Schedule)
Third Defendant
JUDGE:
DAVIES J
DATE OF ORDER:
14 DECEMBER 2016
THE COURT ORDERS THAT:
1.The oral application made on behalf of the fourth and seventh defendants to the Court on 14 December 2016 be refused.
2.Costs reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
DAVIES J:
On 14 December 2016, an urgent application was made on behalf of the fourth and seventh defendants (“Mr and Mrs Senese”) for a direction from the Court in the following terms:
ASIC shall forthwith request [Commissione Nazionale per le Società e la Borsa] CONSOB, pursuant to the IOSCO Multilateral Memorandum of Understanding (2012) to withdraw the written notices dated 5 December 2016 addressed to Eustace Senese and Sandra Senese (“the examinees”) requiring them to attend at CONSOB in Rome on 14 & 15 December 2016 and to request CONSOB to reissue such notices to the examinees requiring their attendance on a date or dates to be notified by ASIC to CONSOB.
The application was supported by an affidavit of Michael Jonathan Kenny (“Mr Kenny”), solicitor for the third to eleventh defendants in this proceeding, sworn 13 December 2016.
I dismissed the application, stating that written reasons would be provided. These are my reasons.
The events giving rise to the application are as follows.
The Australian Securities and Investments Commission (“ASIC”) is currently conducting an investigation into suspected contraventions of the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth) (“the ASIC Act”), by the defendants. As part of the investigations, ASIC has conducted an examination of the ninth defendant, Cameron Senese pursuant to s 19 of the ASIC Act. Mr Cameron Senese is the son of Mr and Mrs Senese.
On 30 August 2016, ASIC wrote to Mr Kenny advising that ASIC intended to undertake examinations of Mr and Mrs Senese pursuant to s 19 of the ASIC Act. Mr and Mrs Senese were at the time, and still are, resident in Italy. The letter asked Mr Kenny to confirm if he had instructions to accept service of s 19 notices addressed to his clients and the current address of his clients and their availability to participate in examinations by video link in the week of 3 October 2016.
On 2 September 2016, Mr Kenny wrote to ASIC stating that he “did not see a power in the Act” obliging a person overseas to comply with a s 19 notice or to attend a video conferencing facility to be examined.
On 6 September 2016, ASIC responded to Mr Kenny’s letter setting out ASIC’s power to serve a s 19 notice on a person overseas and again requesting confirmation of Mr and Mrs Senese’s availability to participate in examinations by video link in the week of 3 October 2016.
On 9 September 2016, Mr Kenny wrote to ASIC stating as follows:
I refer to your letter dated 30 August 2016.
I am instructed to accept service on behalf of Eustace and Sandra Senese.
They would not be available for a video examination until the 3rd or 4th week of October.
I assume that the video facility will be in Milan or Rome.
ASIC will need to fund their hotel accommodation in Milan or Rome for the day before and the day after the examinations. That is because the examinations are likely to be at night Italy time, and they will need to sleep during the day before and after, to ready themselves and recover.
Please confirm that ASIC will do so.
Their legal representative would need to attend in Melbourne at the venue ASIC uses as the Melbourne location.
…
(emphasis added)
On 10 October 2016, ASIC wrote to Mr Kenny stating that ASIC was seeking to make arrangements for the examination of Mr and Mrs Senese. ASIC asked Mr Kenny to confirm the location/city of his clients as a matter of urgency, so that a suitable venue could be arranged for the examination in consultation with the Italian regulator. The letter advised that once the location of Mr and Mrs Senese was confirmed, ASIC would serve Mr Kenny with the relevant notices specifying the examination dates and venue.
Mr Kenny responded to that letter by letter dated 13 October 2016. The letter relevantly stated:
I refer to your letter dated 10 October 2016.
In paragraph numbered 7 of your letter you ask ‘… we are seeking to arrange a suitable examination venue in consultation with the Italian regulator.’
I had always understood that the examinations of my clients by video link were to occur at a suitable venue which would be convenient to them in terms of travel.
I am surprised that there is any need to involve any other agency.
In the circumstances and so that I am properly appraised of the need to involve the Italian regulator, I ask that you clarify the following for me:
1. Is the regulator that you have made reference to ‘Commissione Nazionale per le Societa e la Borsa’;
2. If not, can you please identify the regulator;
3. What if any reciprocal powers exist between ASIC and the Italian regulator that relate to or are referrable to the current investigation and the intended examination;
4. What if any role is the Italian regulator to play in the conduct of the examinations; and
5. Why is it necessary at all for there to be any involvement by the Italian regulator given that we would assume that there are private video link facilities which could be used for the purpose of conducting the intended examinations.
(emphasis added)
ASIC responded by letter dated 14 October 2016 as follows:
As you are aware, ASIC is subject to a duty to protect information obtained in the course of its investigations. Accordingly it is ASIC’s practice to ensure that there are appropriate security measures in place to maintain high levels of privacy when conducting examinations.
ASIC cannot be satisfied that appropriate levels of security can be guaranteed when using private video link facilities, and it is not ASIC’s practice to compromise the security of the information divulged in examination by using such facilities.
Pursuant to a Multilateral Memorandum of Understanding, ASIC made contact with the Commissione Nazionale per le Società la Borsa (CONSOB) seeking permission to use its facilities for the purpose of enabling ASIC staff members to carry out the examination of your clients pursuant to section 19 of the ASIC Act 2001 (Cth).
We repeat the request in our letter dated 10 October 2016 as to the location/city/address of your clients in order to arrange the examination venue. Please treat this request with the utmost urgency.
(emphasis added)
On 20 October 2016, ASIC sent Mr Kenny a further letter requesting him to confirm the location of his clients, and asking him to do so by 5.00 pm on 21 October 2016.
On 20 October 2016, Mr Kenny sent Naomi Miller of ASIC an email stating that Mr and Mrs Senese reside in Tuscany.
On 21 November 2016 ASIC wrote to Mr Kenny advising that:
·ASIC was continuing to make arrangements with the Italian regulator, CONSOB, for the examination of his clients.
·CONSOB had advised that, due to jurisdictional reasons, notices for examination must be personally served on Mr and Mrs Senese.
ASIC asked for confirmation of Mr Kenny’s clients’ specific current residential address, stating that the provision of the specific address would also assist with making all necessary arrangements with the appropriate CONSOB office in either Milan or Rome including Mr and Mrs Senese’s travel arrangements.
Mr Kenny sent an email in response at 8.06 pm on 21 November 2016 to James McAllister‑Harris, a lawyer in Financial Services Enforcement at ASIC (“Mr McAllister‑Harris”), asking what exactly were the “jurisdictional reasons” and “exactly why can’t the examinations be arranged privately through one of the many video conference facilities?” Mr Kenny requested a “detailed answer citing any laws, rules or treaties that compel ASIC to only conduct the examinations via the Italian regulator and prevent ASIC from conducting them privately (if any)”.
On 23 November 2016 ASIC sent a reply to Mr Kenny as follows:
1.We refer to your email of 21 November 2016.
2.You have again asked why private video link facilities for the examination of your clients cannot be arranged. As set out in ASIC’s letter to you dated 14 October 2016, we have explained that private facilities will not provide a secure forum for the examinations.
3.As we have previously advised ASIC has sought the assistance of the Commissione Nazionale per le Società e la Borsa (CONSOB) pursuant to the IOSCO Multilateral Memorandum of Understanding (MMOU). Pursuant to the MMOU, ASIC must ensure compliance with all appropriate laws and procedures that bind the Italian regulator. CONSOB require that any examination conducted in Italy must be undertaken pursuant to their powers, which involves the issuance of notices for a formal examination by that agency.
4.If your clients formally object to the exercise of powers by ASIC or CONSOB under the MMOU, we respectfully suggest that either your clients make a formal application to the Court in that regard, or your clients return to Australia for the examination.
5.We again ask you to confirm your clients’ current residential address without delay.
6.Your clients have indicated to the Court on several occasions that they are keen to assist in this Investigation. If that remains the case, we expect the address to be provided immediately.
(emphasis added)
On 24 November 2016, Mr Kenny sent Mr McAllister‑Harris an email providing the address of his clients, advising that Mr Senese planned to be in Milan on 6 December 2016 and asked that the examinations be arranged on 7 or 8 December 2016.
On 6 December 2016, CONSOB advised ASIC that it had served a formal hearing notice on Mr and Mrs Senese by registered letter on 5 December 2016 and also sent a copy of the notice to Mr Senese’s email address. CONSOB noted that Mr and Mrs Senese had been summoned to CONSOB’s premises in Rome on December 14 and 15 from 8.30 am CET. CONSOB requested Mr and Mrs Senese to confirm their attendance at the examinations by email or fax.
On 12 December 2016, ASIC sent Mr Kenny a letter, noting CONSOB’s advice that it had served the formal hearing notice on his clients by registered post and email on 5 December 2016 and that Mr and Mrs Senese were yet to confirm their attendance at the examinations listed for 14 and 15 December 2016. ASIC asked Mr Kenny to confirm his clients’ receipt of the notices and their availability to attend the examinations on those dates.
At 5.18 pm that day Mr Kenny sent Mr McAllister‑Harris an email, stating that he was unaware that notices had been served or received so he assumed that his clients were unaware but he would seek instructions. Mr Kenny asked for a copy of the notices by return email.
At 5.52 pm Mr Kenny sent another email to Mr McAllister‑Harris that stated as follows:
When I sent the email below to you on 7 December you should have responded that the notices had been sent to my clients on 5 December.
It must have been obvious from my email that my clients and I were unaware that notices had been sent on 5 December.
Instead your letter received by email at 4.52 pm today effectively gives one clear day notice of the examinations.
I still have not seen the notices (despite asking by email at 5.18 this afternoon) and do not know what time the examinations are to occur, or what arrangements ASIC have made in Melbourne for me or counsel to attend via the video facility.
I also do not know where in Italy the examinations are to occur, and if accommodation at ASIC’s expense, has been arranged as previously requested.
It is urgent that you respond to this email and cooperate.
My clients’ position in respect of the examinations is reserved.
(emphasis added)
Mr Kenny sent a further email to Mr McAllister‑Harris at 9.55 pm on 12 December 2016 stating that his clients:
·were unaware of the examination notices;
·had not received any notice in the post; and
·upon checking the email address to which the notices had been sent, saw that the notices had been received on 7 December.
Mr Kenny also wrote as follows:
No arrangements have been made for my client to travel to Rome or for their accommodation there. That was a matter I communicated to you would be required at ASIC’s cost.
No notice has been given to me for me or counsel to attend at ASIC’s end in Melbourne during the examinations.
The notices give my clients the option of taking someone with them in Rome. They do not have anyone in Rome, especially with one day’s notice, and they require their Melbourne lawyers to attend at this end.
…
As stated, notices have not arrived by post.
…
Mr Senese has commitments on 14 and 15 December (including with the computer technician) and the one day’s notice he now has, is not sufficient.
It is a pity that ASIC did not see fit to communicate with me about the notices when ASIC knew the dates, which I assume was prior to 5 December 2016.
…
… the examinations should be rescheduled for other days and I ask that notice is given to me immediately when ASIC knows the dates.
…
(emphasis added)
Mr McAllister‑Harris stated that he only received and read this email when he arrived at work at approximately 8.30 am on 13 December 2016.
On 13 December 2016 at 9.59 am, Mr Kenny sent Mr McAllister Harris an email stating that Mrs Senese was not available to be examined between 14 and 19 January 2017. At around 10.45 am Mr Kenny also called Mr McAllister‑Harris but Mr McAllister‑Harris was not at his desk and missed his call. At 10.48 am Mr Kenny sent Mr McAllister‑Harris an email stating he wanted to know if ASIC would “cooperate with my emails last night” and stating that he would otherwise ask for the matter to be listed at the earliest opportunity.
At 12.34 pm on 13 December 2016, Mr Kenny sent an email to the Court requesting an urgent hearing the following day.
At 2.22 pm on 13 December 2016, Mr Kenny received a letter from ASIC and page 11 of the transcript from the hearing on 22 August 2016. The relevant parts of that letter are as follows:
Eustace and Sandra Senese
7Your office was aware that ASIC has been seeking to conduct an examination of your clients through the Italian regulator since 10 October 2016.
8On 21 November 2016, ASIC sent correspondence to you advising of ASIC’s continued efforts to make arrangement with the Italian regulator, CONSOB, for the examination of your client. ASIC also sought your clients’ address so that service of notice of examination could be effected on your clients. Your office was on notice that a notice of examination was to be imminently served on your clients.
9ASIC notes that a request for the address of your clients was initially made on 30 August 2016.
10On 24 November 2016 by way of email, you provided an address for service for your clients, Eustace and Sandra Senese, and requested that the examinations try to be arranged for 7 or 8 December.
11CONSOB advised that your proposed dates were public holidays in Italy.
12Service of the notices for examination was undertaken by CONSOB, and CONSOB set the date for the examinations. Any issues relating to the date of the examination is a matter for your clients to raise with CONSOB.
13In relation to the alleged difficulties with your client accessing the email address [email protected], this email address has been used by your client in communications to ASIC. You now state that your client does not regularly check this email account, which was obviously not known to ASIC. In any event, the notices for examination were also served by CONSOB on the residential address that you provided on 24 November 2016 – the copy served by email was in addition to the hard copy served.
14The examinations will be conducted by CONSOB, pursuant to their laws and procedures. ASIC will not be attending through video link. Any application for travel costs and video link that your client wishes to make should be made to CONSOB.
15CONSOB are awaiting confirmation of your clients’ attendance at the examination.
(emphasis added)
Mr Kenny deposed that this letter was the first communication from ASIC advising that the examinations would not be conducted by ASIC, that they were to be conducted independently by CONSOB and that no arrangements would be made in Melbourne for him or his clients’ counsel to represent them by video link.
An urgent hearing was given on 14 December 2016.
The basis of the application as stated by Mr Kenny in his affidavit was that ASIC had always known that his clients and their legal representatives had proceeded on the basis that the examinations would be conducted by ASIC by video link with Mr Kenny or counsel in attendance in Melbourne. Mr Kenny exhibited in support his letters of 9 September 2016 and 13 October 2016, and ASIC’s letter of 14 October 2016.
It was submitted by counsel for Mr and Mrs Senese that ASIC had known, or must have known, since at least 6 December 2016 of the “departure from the stated position” in ASIC’s letter of 14 October 2016 that the examinations would be conducted by video link, and that Mr Kenny was “completely misled” by ASIC as Mr Kenny “had always understood by reason of what [he] had been told by ASIC … that there was to be a video link”. It was submitted that ASIC has not acted in accordance with its model litigant obligations by its failure to put Mr Kenny on notice earlier than 13 December 2016 that he would have to make his own arrangements with CONSOB to participate in the examinations by video link. It was submitted that as the consequence of the very late notice on 13 December 2016 that ASIC would not be participating in the examinations by video link and that Mr Kenny would have to make his own arrangements with CONSOB to participate by video link, the examinations should not proceed on 14 and 15 December 2016 but be rescheduled for another time to allow Mr Kenny’s clients the opportunity to organise appropriate legal representation in Italy.
ASIC strenuously denied that it had breached its model litigant obligations stating that Mr and Mrs Senese’s solicitors were put on notice by the letter of 23 November 2016 that ASIC would not be conducting the examination of their clients, and that CONSOB would be conducting the examination pursuant to its powers.
I do not consider that the material shows that Mr Kenny was misled by ASIC as claimed. ASIC’s letter of 23 November 2016 alerted Mr Kenny to the fact that that the examination of his clients would be undertaken by CONSOB pursuant to their powers and that private video link facilities for the examination of his clients could not be arranged. Mr Kenny was also alerted by ASIC on 12 December 2016 that CONSOB had served the formal hearing notice on his clients by registered post and email on 5 December 2016 and that it had listed the examinations for 14 and 15 December 2016. It appears that no steps were taken by Mr Kenny to ascertain what arrangements were in place, if any, for himself and counsel to participate in the examinations by video link beyond stating to ASIC in his email of 5.50 pm on 12 December that he still did not know “what arrangements ASIC have made in Melbourne for me or counsel to attend via the video link facility”. It appears that Mr Kenny assumed that this was being organised by ASIC, as there is nothing in the correspondence to indicate that ASIC told Mr Kenny that there would be a video link to Melbourne of the examinations conducted by CONSOB, let alone that ASIC would be making those arrangements. Mr Kenny may have failed to appreciate that he needed to make his own arrangements with CONSOB once on notice that CONSOB was conducting the examination pursuant to their powers but it does not seem to me from a consideration of the material that ASIC is blameworthy for Mr Kenny’s misapprehension. Contrary to counsel’s submission, the 23 November 2016 letter ought to have put Mr Kenny on notice that the position with respect to the conduct of the examinations as indicated by the 14 October 2016 letter had changed.
I certify that the preceding thirty‑five (35) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Davies. Associate:
Dated: 23 December 2016
SCHEDULE OF PARTIES
VID 848 of 2016 Defendants
Fourth Defendant:
EUSTACE SENESE
Fifth Defendant:
SANSEN PTY LTD (ACN 111 816 178)
Sixth Defendant:
TRANSCOMM GLOBAL PTY LTD
(ACN 169 503 762)Seventh Defendant:
SANDRA SENESE
Eighth Defendant:
BIANCO PTY LTD (ACN 604 778 305)
Ninth Defendant:
CAMERON DAVID SENESE
Tenth Defendant:
IMC HOLDINGS PTY LTD (ACN 138 415 291)
Eleventh Defendant:
YOAV IDA
Twelfth Defendant:
WESTPAC BANKING CORPORATION
(ACN 007 457 141)Thirteenth Defendant:
NATIONAL AUSTRALIA BANK LIMITED
(ACN 004 044 937)Fourteenth Defendant:
BENDIGO AND ADELAIDE BANK LIMITED
(ACN 068 049 178)Fifteenth Defendant:
COMMONWEALTH BANK OF AUSTRALIA
(A.B.N. 48 12 12 124)Sixteenth Defendant:
CITIGROUP PTY LTD (ABN 88 004 325 080)
0
0
2