Kavanagh & Anor v Australian Securities Commission; Tunbridge v Australian Securities Commission; Donovan v Australian Securities Commission

These three applications for special leave to appeal concerned the Australian Securities Commission (ASC) initiating civil proceedings against directors and an auditor under section 554 of the Companies Code, seeking declarations for relief. The ASC also commenced criminal proceedings against the same individuals. The applicants sought to have the civil proceedings stayed pending the outcome of the criminal proceedings.

The central legal issue before the High Court was whether the civil proceedings should be postponed to the conclusion of the criminal proceedings. This involved considering the ASC's dual role as both the plaintiff in the civil proceedings and the prosecutor in the criminal proceedings, and whether this dual role, coupled with the ASC's stated public interest objective of preventing the use of allegedly ill-gotten gains for defence costs, warranted a stay. The court was required to determine the weight to be given to the ASC's position as the moving force behind both sets of proceedings, particularly in light of the civil proceedings' objective of making orders for the benefit of the company.

The court considered the reasoning of the primary judge, who had found that the significance of the ASC's dual role was reduced because the civil proceedings aimed to benefit the company. The applicants argued that this approach contained errors of law, particularly in giving insufficient weight to the ASC's position as both plaintiff and prosecutor. The applicants contended that the ASC's stated public interest reason for commencing civil proceedings – to prevent the use of funds obtained through criminal conduct for defence costs – was a relevant consideration that the primary judge had not adequately addressed. The court was therefore tasked with determining the appropriate legal principles to apply when assessing whether to grant a stay in such circumstances.