ML v Australian Securities and Investments Commission

[2013] NSWCA 109

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

ML v Australian Securities and Investments Commission [2013] NSWCA 109

Hearing dates:

2 May 2013

Decision date:

02 May 2013

Before:

Basten JA

Decision:

1. The name of the applicant and information which will allow him to be identified is not to be published.

2. Order 1 is an interim order made under s 8(1)(a) of the Court Suppression and Non-publication Orders Act 2010 (NSW) as being necessary to prevent prejudice to the proper administration of justice and is to continue until the order made in the Common Law Division is terminated or until further order of this Court, whichever first occurs.

3. Paragraph 13 of the affidavit of John Leslie Sutton of 2 May 2013 filed for the applicant is rejected on the basis that the contents, which are relied on only in relation to the non-publication order application (and which include hearsay) are of marginal relevance and in part scandalous.

4. Dismiss the application for a stay of the Companies and Liquidators Disciplinary Board proceedings 02/NSW12.

5. Otherwise dismiss the notice of motion filed 2 May 2013.

6. Order that the applicant pay the first respondent's costs of the motion.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

ADMINISTRATIVE LAW - judicial review - jurisdiction of State courts - where Commonwealth authority party to proceedings - where State court exercising federal jurisdiction - where no Commonwealth law conferred such federal jurisdiction - whether s 9 Administrative Decisions (Judicial Review) Act 1977 (Cth) excludes jurisdiction - where s 9 subject to s 1337B(3) Corporations Act 2001 (Cth) - where s 1337H(3) requires State Court to transfer s 1337B(3) proceedings to Federal Court unless related to other proceedings pending in a State court - where no such proceedings pending

CONSTITUTIONAL LAW - judicial review - jurisdiction of State courts - whether State court has jurisdiction to prevent Companies Auditors and Liquidators Disciplinary Board exercising powers under Commonwealth law - where the Board is a Commonwealth authority - conferral of jurisdiction under Judiciary Act 1903 (Cth) s 39(2) - whether s 9 Administrative Decisions (Judicial Review) Act 1977 (Cth) excludes jurisdiction - whether s 23 Supreme Court Act 1970 (NSW) empowers State court to prevent Board exercising powers under Commonwealth Law

PROCEDURE - civil - whether stay should be granted in respect of disciplinary proceedings - commencement of criminal proceedings against applicant possible but no criminal charges laid - Board empowered to exercise powers even where conduct might amount to an offence - public interest in prompt resolution of disciplinary proceedings

Legislation Cited:

Administrative Decisions (Judicial Review) Act 1977 (Cth), ss 3, 9
Australian Securities and Investments Commission Act 2001 (Cth), s 219; Part 11
Constitution, s 75(v)
Corporations Act 2001 (Cth), ss 9, 1286, 1292, 1337B, 1337H
Court Suppression and Non-publication Orders Act 2010 (NSW), s 8
Judiciary Act 1903 (Cth), ss 39, 68, 79, 80
Proceeds of Crime Act 2002 (Cth), s 319
Supreme Court Act 1970 (NSW), s 23
Uniform Civil Procedure Rules 2005 (NSW), rr r51.8, 51.10

Cases Cited:

Adams v Cleeve [1935] HCA 12; 53 CLR 185
Australian Securities and Investments Commission v Edensor [2001] HCA 1; 204 CLR 559
Lee v Director of Public Prosecutions (Cth) [2009] NSWCA 347; 75 NSWLR 581
Lee v Regina [2013] NSWCCA 68
McMahon v Gould (1982) 7 ACLR 202; 1 ACLC 98
SD v New South Wales Crime Commission [2013] NSWCA 48

Category:

Procedural and other rulings

Parties:

ML (Applicant)
Australian Securities and Investment Commission (First Respondent)
Companies Auditors and Liquidators Disciplinary Board (Second Respondent)

Representation:

Counsel:

K Dawson (Applicant)
N Williams SC/P D Herzfeld (First Respondent)
Submitting appearance (Second Respondent)
Solicitors:

Armstrong Legal (Applicant)
Australian Securities and Investment Commission (First Respondent)
Australian Government Solicitor (Second Respondent)

File Number(s):

CA 2013/135123

 Decision under appeal 

Jurisdiction:

9111

Citation:

ML v Australian Securities and Investments Commission [2013] NSWSC 283

Date of Decision:

2013-04-03 00:00:00

Before:

Rothman J

File Number(s):

2012/354424

Judgment

1. BASTEN JA: The applicant is a liquidator on the register kept pursuant to s 1286 of the Corporations Act 2001 (Cth). The first respondent, the Australian Securities and Investments Commission ("ASIC"), is an entity with powers in respect of the registration of liquidators, including the power to bring proceedings before the second respondent, the Companies Auditors and Liquidators Disciplinary Board ("the Board"), seeking disciplinary orders against liquidators, including orders cancelling or suspending the registration of a liquidator: s 1292. ASIC has commenced proceedings against the applicant before the Board, which the applicant sought to stay.

1. The applicant asserted that the misconduct alleged against him by ASIC (which he denied) may give rise to criminal proceedings. ASIC accepted that that may be so, although it noted that no proceedings had yet been commenced. The disciplinary proceedings are, however, on foot and were due to continue before the Disciplinary Board on Monday, May 6; hence the urgency of the present application. On 2 May 2013, the Court dismissed the application. These reasons expand on the brief ex tempore reasons given when dismissing the application. They also include a variation of the non-publication order made on 2 May 2013.

1. The applicant commenced proceedings in the Common Law Division seeking a stay of the Disciplinary Board proceeding. The application was heard at the end of January 2013 by Rothman J, who dismissed the application: ML v Australian Securities and Investments Commission [2013] NSWSC 283. That judgment was delivered on 3 April 2013, but an application for leave to appeal was not filed until May 1, being the last available day for taking that step, absent a notice of intention to appeal: Uniform Civil Procedure Rules 2005 (NSW), rr 51.8 and 51.10(1)(b). If the relief sought by the applicant by way of an interlocutory stay were available, the dilatory behaviour of the applicant would have militated against a grant of relief.

Jurisdiction of State courts

1. The Board is established under the Australian Securities and Investments Commission Act 2001, Part 11 ("the ASIC Act"). It is a "Commonwealth authority" as defined in s 9 of the Corporations Act, being established under a Commonwealth Act. It is also a Commonwealth authority for the purposes of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act") and a decision of an administrative character made or proposed to be made by the Board is a decision to which the ADJR Act applies: s 3(1), decision to which this Act applies.

1. Pursuant to s 9 of the ADJR Act, a State court does not have jurisdiction to "review" a decision to which s 9 applies, which is, relevantly, a decision to which the Act applies. That preclusion of jurisdiction is said to operate "notwithstanding anything contained in any Act other than this Act", and would, in its terms, appear to prevent a vesting of jurisdiction pursuant to s 39(2) of the Judiciary Act 1903 (Cth). However, a note to s 9(1) states that the subsection has effect, relevantly, subject to s 1337B(3) of the Corporations Act.

1. The term "review" for the purposes of s 9 of the ADJR Act includes the grant of an injunction and the making of quashing orders, prohibitory orders, mandatory injunctions or declaratory orders: s 9(2), review. Section 9, according to its terms, would prevent this Court making any order which had the effect of preventing the Board making any decision in the exercise of its powers with respect to the applicant. The first question is whether that result is overridden by the Corporations Act. The provision referred to in the note to s 9(1) is in the following terms:

1337B Jurisdiction of Federal Court and State and Territory Supreme Courts

...

(3) Despite section 9 of the Administrative Decisions (Judicial Review) Act 1977, jurisdiction is conferred on the Supreme Court of:

(a) each State ...

...

with respect to matters arising under that Act involving or related to decisions made, or proposed or required to be made, under the Corporations legislation by a Commonwealth authority or an officer of the Commonwealth.

1. Decisions of the Board are made under its constituting legislation, namely the ASIC Act. As the Board is a Commonwealth authority for the purposes of the Corporations Act, s 1337B would, absent a relevant statutory exception, confer jurisdiction on the Supreme Court with respect to such decisions as matters arising under the ADJR Act. An order preventing the Board from making a decision, if otherwise available, would fall within the powers of this Court.

1. However, as counsel for ASIC noted, the conferral of jurisdiction effected by s 1337B is qualified by the terms of s 1337H. That section applies to a s 1337B(3) proceeding in, amongst other courts, a State Supreme Court: s 1337H(1). For the purposes of the section, the State Supreme Court is the "transferor court". Subsection (3) provides as follows:

1337H(3) If:

(a) the relevant proceeding is a subsection 1337B(3) proceeding; and

(b) the transferor court is a State ... Supreme Court;

the transferor court must transfer the relevant proceeding to the Federal Court unless the matter for determination in it arises out of, or relates to, another proceeding pending in any court of that State ... that:

(c) arises, or a substantial part of which arises, under the Corporations legislation; and

(d) is not a subsection 1337B(3) proceeding;

regardless of which proceeding was commenced first.

1. There is no other such proceeding in this Court or any other court of the State: accordingly, the exception does not apply and this Court is obliged to transfer any proceeding before it under s 1337B(3) to the Federal Court.

1. ASIC submitted that this provision was not engaged because the applicant had not invoked a jurisdiction arising under the ADJR Act. Accordingly there was nothing to transfer to the Federal Court, nor was such an order sought. Absent reliance on s 1337B, the relief sought in the summons before the primary judge fell within the preclusion in s 9 of the ADJR Act.

1. The applicant relied upon what his counsel described as the inherent power of this Court, reflected in s 23 of the Supreme Court Act 1970 (NSW), to take such steps as may be necessary to protect the due administration of criminal justice in New South Wales. However, both ASIC and the Board being Commonwealth authorities, in considering the application before it, the Court is exercising federal jurisdiction: Australian Securities and Investments Commission v Edensor [2001] HCA 1; 204 CLR 559. This Court has no power to exercise federal jurisdiction unless conferred by a valid law of the Commonwealth. Since 1901, the statement that the Supreme Court is a court of unlimited jurisdiction, even in relation to events occurring within the State, must be treated as qualified.

1. The conferral effected by s 39(2) of the Judiciary Act, has been described as "expressed in terms of perfectly general application": Adams v Cleeve [1935] HCA 12; 53 CLR 185 at 190 (Rich, Dixon and Evatt JJ). Nevertheless, a later statute "disclosing an intention at variance with the full operation of sec 39" must be given effect: ibid. The effect of s 9 is to prevent the conferral on this Court of any jurisdiction of the kind exercisable by the High Court under s 75(v) of the Constitution to control the activities of a Commonwealth officer or entity.

1. No state law could in its own terms confer federal jurisdiction on this Court, regardless of the additional difficulty raised by s 9 of the ADJR Act. It follows that this Court has no power to make orders of the kind sought which would prevent the Board exercising its statutory functions under Commonwealth law.

1. There may appear to be a large constitutional question as to the power of a State Supreme Court to protect the administration of criminal justice under State law from a possible contempt by Commonwealth authorities or Commonwealth officers. However, where as in this case and as will almost inevitably be the case, the Commonwealth authority or officer is a party to the proceedings, the State court will be exercising federal jurisdiction. In accordance with current orthodoxy, there can be no co-existing State jurisdiction, so that the whole of the jurisdiction of the court must be conferred by a law of the Commonwealth. Unless the applicant could identify such a law, this Court is powerless. No broader constitutional issue arises. It is not necessary to consider the possible role of the High Court or the Federal Court. It should, however, be noted that if there had been relevant criminal proceedings "pending" in a State court, s 1337B jurisdiction might have been available, not being precluded by s 1337H(3).

Merit of application

1. In the event that the Court had the jurisdiction and powers on which the applicant relies, it nevertheless should not exercise them in the present case. The two critical factors in this analysis are that, as yet, no criminal charges have been laid and, in any event, the Board is empowered to exercise its powers despite the fact that the conduct in question may have constituted an offence: Corporations Act, s 1292(11).

1. The basic principles which apply in these circumstances were lucidly discussed in the reasons of the Chair of the Board in refusing to vacate the hearing dates and in the reasons of the primary judge.

1. There is a long history of case law relating to the grant of stays where a person subject to criminal proceedings, or who apprehends the commencement of criminal proceedings, is also the subject of civil, disciplinary or other proceedings. Some of the cases were reviewed by me in Lee v Director of Public Prosecutions (Cth) [2009] NSWCA 347; 75 NSWLR 581, in a judgment in which Macfarlan JA and Sackville AJA joined, at [32]ff: see also SD v New South Wales Crime Commission [2013] NSWCA 48 at [33] and [44]-[45] and Lee v Regina [2013] NSWCCA 68 at [61], [64]-[69] and [74]-[79]. The first of these cases involved proceedings under the Proceeds of Crime Act 2002 (Cth); the latter two, inquiries conducted under the New South Wales Crime Commission Act 1985 (NSW). None involved disciplinary proceedings. Reference was made in Lee (2009) to the principles set out by Wootten J in McMahon v Gould (1982) 7 ACLR 202; 1 ACLC 98, an authority also relied upon by the primary judge in the present case. As stated at [35] in Lee (2009), "the absence of a clear entitlement to a stay in a case where criminal charges had been laid made it more difficult to contend for a stay in his case, where not only had no criminal charge been laid, but it was not clear that the applicant would be charged with an indictable offence". In the present case, the primary judge described a criminal charge as "on the cards". That phrase has no precise meaning, but it may be understood to refer to a real and not fanciful chance that a particular step will be taken, at some undefined time.

1. There is a significant public interest in dealing with the complaints against the applicant so that, if necessary, appropriate orders can be made to protect the public interest generally, and also the exercise of public functions by an officer appointed by the Court to manage corporations. The public interest in making such orders, at least on a temporary basis, may outweigh the possibly significant delay which would attend awaiting the commencement, conduct and determination of future criminal charges.

1. There was no indication that the applicant would be called as a witness by the Disciplinary Board. No doubt he would attend and might be expected to answer the complaints against him, if he were not to suffer an adverse outcome. However, that would be a matter of choice. If he decided to give evidence, he could decline to answer questions. One might expect that the Chair of the panel hearing the complaint would be sensitive to any concern about self-incrimination and would not require him to answer, pursuant to s 219(2)(b) of the ASIC Act. Further, the obligation to answer would not apply "to the extent that the person has a reasonable excuse": s 219(2A).

1. To the extent that he might be inhibited in cross-examining witnesses, as his counsel asserted, that would involve the possible loss of a forensic advantage in relation to any criminal charges, rather than a diminution of the privilege against self-incrimination. In any event, he has already made statements in his own defence.

1. If it were a case of reviewing the reasons given by the Chair on 21 January 2013 for refusing to vacate the hearing fixed for 6 May 2013, they revealed no error of law on his part. Further, it has not been established that the continuation of the proceedings would constitute a potential contempt of any possible criminal proceedings. However, these views are strictly obiter, as the application was refused for want of jurisdiction.

Non-publication order

1. At the commencement of the hearing, an interim order was made preventing the publication of the applicant's name or any information which would allow him to be identified. The reason for the order was that the primary judge had made such an order, which is currently being reviewed by the primary judge, but is not under appeal. The fact that the applicant is presently the subject of disciplinary proceedings could not, in my view, provide an adequate basis for such an order, even assuming criminal charges are laid in the future. The test under s 8 of the Court Suppression and Non-publication Orders Act 2010 (NSW) requires, relevantly for present purposes, that the suppression of publication is "necessary to prevent prejudice to the proper administration of justice": s 8(1)(a). There would be a further consideration, namely doubt as to whether this Court has jurisdiction to make such an order binding a Commonwealth authority. However, these issues were not argued and need not be determined. The order made in this Court should terminate if and when the order made in the Common Law Division is lifted. The interim order made at the hearing should be qualified so as to have this effect.

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Decision last updated: 08 May 2013