Kippe v Ausn Securities Comm

[1997] HCATrans 85

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B31 of 1996

B e t w e e n -

MAXWELL ALFRED KIPPE

Applicant

and

AUSTRALIAN SECURITIES COMMISSION

Respondent

Application for special leave to appeal

BRENNAN CJ
DAWSON J
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 4 APRIL 1997, AT 9.45 AM

Copyright in the High Court of Australia

MR P.A. KEANE, QC:   May it please the Court, I appear with my learned friend, MR D.K. SMITH, for the applicant.  (instructed by John Neive O’Donoghue)

MR P.H. MORRISON, QC:   If the Court pleases, I appear for the respondent.  (instructed by Regional General Counsel, Australian Securities Commission)

MR KEANE:   Your Honours, this application raises the question whether the protection afforded by section 68(3)(b) of the Australian Securities Commission Act applies to proceedings or orders which prevent a person from carrying on his or her ordinary business, in this case a banning order under section 829 of the Corporations Law.  The critical issue is the proper construction of the ASC law and the point is a short - but as the Full Court of the Federal Court acknowledged - an important one.  The Full Court resolved the critical issue, that is whether proceedings for a banning order is a proceeding for the imposition of a penalty, by reference to a consideration of the purpose of the legislation which authorises that proceeding. 

We can refer your Honours very briefly to the passages in the judgment which show that this is so, if your Honours would go first of all to page 68 of the record, lines 50 to 55, where their Honours recognise a:

distinction between “punitive” and “protective” statutory provisions ‑

Next, your Honours, if one goes to page 72, lines 40 to 45:

Consideration of the grounds on which a banning order is made do not support the suggestion that the banning order is of a penal nature and certainly is not one for the imposition of a penalty. Rather, the grounds set out in s829 clearly point to the conclusion that it is properly characterised as protective.

Once again it is the character of the section which is underlined.  Finally, by terms of reference to the record at page 73, commencing at line 36 and going over the page where, particularly at the bottom of page 73:

A proceeding which may result in a banning order under s829, in our view, is to be characterised, consistently with the decisions referred to above, as “protective” in purpose and not as one for the imposition of a penalty. It unduly strains the language enacted by parliament, to suggest that proceedings directed to the making of a banning order for the reasons specified in s68(1) of the ASC Act, should be described as being for the imposition of a penalty.

If your Honours go to page 55 of the record, your Honours will find the text of section 68 set out in so far as it is relevant ‑ ‑ ‑

GUMMOW J:   Their Honours also refer to page 73, line 21, to “The immediate and direct legal effect”, did they not?

MR KEANE:   Yes, they did, your Honour.  Your Honour, those observations, in our respectful submission, reflect the error which we respectfully submit the court fell into, the error being the failure to appreciate that a penalty imposed on an individual is none the less a penalty because it is imposed for the greater public good.  In our respectful submission, to approach the matter ‑ ‑ ‑

BRENNAN CJ:   That rather begs the question, does it not, to put it that way?  The question is whether it is a penalty.

MR KEANE:   The question is whether the proceedings are for the imposition of a penalty.  The question is not whether the section is intended to be protective or punitive.  The question is not one of the policy of the legislature or the characterisation of the section as it might be, for example, if one was concerned with issues of onus.  Rather, we are concerned to identify the meaning of the section.  If one looks at page 55 where the text of section 68(3) is set out, one will see that the section itself distinguishes, in paragraph (a), between:

(a)  a criminal proceeding; or
(b)  a proceeding for the imposition of a penalty;

Paragraph (b) is not concerned with the character of the proceeding, much less the character of the section which authorises it, rather it is concerned, in our respectful submission, as a matter of ordinary language, with the consequence for the person against whom the proceeding is brought.  We submit that that is confirmed by the setup of the section which refers to a criminal proceeding as opposed to a proceeding for the imposition of a penalty, and it is confirmed, in our respectful submission, by reference to considerations of legislative history and the observations of the Joint Select Committee on Corporations, referred to at page 62 of the record.  The relevant section or relevant provisions are at page 62, lines 15 to 20, which it is evident that the protection intended to be afforded by 68(3)(b) was to be co-extensive with the protection originally afforded by the common law privilege against self-penalisation. 

That privilege, in our submission, was a broad - perhaps it might be said amorphous one - but nevertheless, a broad one, extending to cover any penalty or anything in the nature of a penalty, any penalty, forfeiture or, indeed, even an ecclesiastical censure and, in this case, there is indeed, in our respectful submission, a forfeiture of, in effect, rights ‑ and I should not even say in effect ‑ it is a forfeiture of rights to practise as a stockbroker, as a licensed or approved representative of a dealer in securities, and that order, that limitation on rights, is imposed, if your Honours will go over the page to page 56 in the record and look at the text of section 829, subparagraphs (e) and (f). That deprivation would relevantly be effected pursuant to views about the conduct, or perhaps misconduct, in other words the delinquency, of the person against whom the order is sought.

So that, in our respectful submission, it is correct to say ‑ and it is not to beg the question ‑ that there is a distinction, perhaps a nice distinction but nevertheless a clear and accurate distinction, between the process of reasoning which the court pursued, which is to identify the purpose or the character of the statutory provision authorising the proceedings, and the effect of those proceedings on the person proceeded against, and it is the latter issue which is relevant for section 68(3)(b).

BRENNAN CJ:   Mr Solicitor, take the wording of these two sections. In section 829(f), the condition which enlivens the Commission’s power is the possession of reason to believe, whatever that reason may be.

MR KEANE:   Yes, your Honour.

BRENNAN CJ:   If one looks at section 68(3), one is speaking about the admissibility of evidence in proceedings.  What are the proceedings which the Commission engages in in order to satisfy itself as to the existence of its power under 829?

MR KEANE:   The proceeding for the banning order, your Honour.

BRENNAN CJ:   What is it?  What is that proceeding?

MR KEANE:   That is a proceeding which is enlivened by the decision of the Commission to consider making such an order.  There is a wide definition of “proceeding” relevantly for this purpose.  It may be found in ‑ ‑ ‑

GUMMOW J:   It picks up 837, does it not, with opportunity for a hearing, and so on?

MR KEANE:   Yes, that is right.  It is intended that there be a hearing and, in our respectful submission, that procedure or that proceeding, that form of proceeding is the proceeding in the course of which the order may be made.

DAWSON J:   What about paragraph (a) of 829?  That does not involve a proceeding?

MR KEANE:   No, it does not, your Honour, and that is one of the paragraphs that their Honours relied upon in characterising the section as one, the object of which - characterising section 829 as one, the object of which was protective of the public. But, in our respectful submission, your Honours, to say that is to say nothing about the proper construction of 68(3)(b) of the ASC law which, as a matter of language and as a matter of evident statutory intent, is concerned not with the purpose of the law or the nature of the law which authorises the proceedings, but with the likely effect upon the person proceeded against. It is the proceeding for the imposition of a penalty, that is to say, what is likely as the result of that proceeding.

DAWSON J:   But the idea of a penalty implies punishment and punishment is not something which is to be discerned from the terms of section 829. Merely to suffer a disadvantage is not necessarily to suffer punishment, that is to say a penalty.

MR KEANE:   One is familiar with, for example, the cases on professional discipline where it is commonplace for the courts to advert to the point that the proceedings are protective and not punitive.  But that having been said, it is nevertheless the case - and has been recognised as being the case - that while the purpose of the proceedings is not to punish, that may be the effect on the person affected.  That is recognised, for example, in the passage from Chief Justice Gibbs referred to at page 64 of the record at about line 55:

Nevertheless, although the penalties provided by s88 are disciplinary penalties, they are nonetheless penalties -

And perhaps, also, by the observations your Honour Justice Gummow made in Controller-General of Customs v Disciplinary Appeal Committee, which is excerpted at page 66 of the record at line 50:

the ‘penalties’ with which the privilege is concerned extend to disciplinary action such as that provided for in section 623(6) of the Public Service Act.

In other words, the jurisdiction that is being exercised may not be one which is in form by considerations of punishment, as opposed to considerations of protection.  That is because those cases are concerned with the nature of the jurisdiction, for purposes of onus or so forth.  They are beside, in our respectful submission, the point here, the point being - and we will not say it again - that, as a matter of language, 68(3)(b) ‑ it is a matter of language, history and structure of the section ‑ 68(3)(b) focuses on the effect of the proceedings on the person proceeded against.

BRENNAN CJ:   Is there any authority which establishes that a withdrawal of a licence or privilege to practise a particular avocation is a penalty?

MR KEANE:   Your Honour, the closest we have got to that are the driving licence cases which have been held to be - the loss of a licence has been held to be penal or a penalty.  We cannot answer your Honour beyond that.

DAWSON J:   It depends on the circumstances, does it not?  But if one looks at (c), a person who is -

incapable, through mental or physical incapacity, of managing his or her affairs;

Now, no one could suggest that in those circumstances the withdrawal of the right to act in certain capacities was a penalty.

MR KEANE:   No, your Honour.

DAWSON J:   You do not suggest it, do you?

MR KEANE:   Oh no, because the proceedings, in those circumstances, the effect of those proceedings would not be to impose a loss or forfeiture on a party to which that party has subjected itself by non-fulfilment of an obligation.  We are here referring to the Australian Encyclopedic Legal Dictionary of “penalty” which is “ A loss or forfeiture to which one subjects oneself by non-fulfilment of an obligation”.  Those provisions are not concerned with the imposition of a forfeiture of rights to practise one’s livelihood by reason of delinquency, by reason of non-fulfilment of an obligation.  But these particular proceedings here are and, in our respectful submission, that is what engages 68(3)(b).  We come back again to the point that it is critical to look at the effect of the proceedings in question upon the party proceeded against.

Unless your Honours have something further for us, those are our submissions.

BRENNAN CJ:   Thank you, Mr Solicitor.  We need not trouble you, Mr Morrison.

Having regard to the nature of section 829, we are of the opinion that the decision of the Full Court of the Federal Court is correct. Accordingly special leave is refused.

MR MORRISON:   I ask for costs.

BRENNAN CJ:   Do you have anything to say about that, Mr Solicitor?

MR KEANE:   No, your Honours.

BRENNAN CJ:   It will be refused with costs.

AT 10.03 AM THE MATTER WAS CONCLUDED