Australian Prudential Regulation Authority v Garrett

B PROCEDURAL HISTORY 3 On 14 August 2023, I made the following orders to enjoin Mr Garrett from carrying on a "banking business" (Orders): 1. In these orders: "purported bank" means the "Dynamic Capital Bank", "Banca di Como", "Banque de Capital Dynamique", any derivation thereof, or any other body, whether incorporated or not, described as a "bank" which body: (a) does not have the consent of the applicant under s 66 of the Banking Act 1959 (Cth) (Banking Act); or (b) is not in possession of an authority under s 9 of the Banking Act to carry on banking business; or (c) is not otherwise the subject of an order by the applicant pursuant to s 11 of the Banking Act that determines that s 66(1) of the Banking Act does not apply. 2. The respondent be permanently restrained under s 65A of the Banking Act, whether by himself, his servants or agents or otherwise, from orally or in any written or electronic form: (a) carrying on any banking business in Australia in contravention of s 7 of the Banking Act; (b) assuming or using the words "bank", "banker", "banking", "banca", "banque" or any words or phrases of like import (whether or not in English) in relation to any purported bank, business or purported business in contravention of s 66 of the Banking Act; and (c) advertising, representing or stating that any purported bank, business or purported business will carry on banking business. 3. The respondent be permanently restrained under s 23 of the Federal Court of Australia Act 1976 (Cth), whether by himself, his servants or agents or otherwise, from carrying on any activities incidental to carrying on a "banking business" as defined s 5 of the Banking Act, including but not limited to, issuing any bill or note for the payment of money payable to bearer on demand and intended for circulation, or which purports to be a bill or note for the payment of money payable to bearer on demand and intended for circulation, in contravention of s 44 of the Reserve Bank Act 1959 (Cth). 4 On 25 September 2023, APRA filed a statement of charge against Mr Garrett, alleging that Mr Garrett has acted in contempt of Court by breaching the Orders by continuing to: a. carry on banking business in Australia in contravention of s 7 of the Banking Act 1959 (Cth) (Banking Act) [in breach of Order 2(a)]; b. assume or use the words "bank", "banker", "banking", "banca", "banque" or words or phrases of like import (whether or not in English) in relation to any purported bank, business or purported business in contravention of s 66 of the Banking Act [in breach of Order 2(b)]; c. advertise, represent or state that purported bank, business or purported business will carry on banking business [in breach of Order 2(c)]; and/or d. whether by himself, his servants or agents or otherwise, carry on activities incidental to carrying on a "banking business" as defined s 5 of the Banking Act [in breach of Order 3]. 5 Since APRA filed the statement of charge, Mr Garrett has filed a miscellany of subpoenas disguised as "Outlines of Submissions" against various corporations and government officials. My Chambers has received several enquiries regarding the legitimacy of these subpoenas, among countless other emails sent to my Associate or the Registry from Mr Garrett. 6 Mr Garrett has made several complaints concerning the basis upon which the initial relief was sought and obtained by APRA. As I have explained to Mr Garrett, those are not matters before me, given that I am dealing with the statement of charge and whether the contempt as alleged is made out on the evidence.

C THE RELEVANT LAW 7 Irrespective of whether an order of a superior court is subject to any appealable error, the law imposes a strict duty of compliance on those subject to a court order: Australian Competition and Consumer Commission v Hughes [2001] FCA 38 (at [17] per Tamberlin J). As observed by Tamberlin J, orders are not made simply to suggest or advise persons that they ought to keep the law as proclaimed but to ensure that the law is carried out as determined by the decision to which the order is made (at [15]). 8 Where there is non-compliance with a court order, s 31 of the FCA Act vests the Court with express judicial power to punish contempts of its power and authority: Siminton v Australian Prudential Regulation Authority [2008] FCAFC 89; (2008) 168 FCR 140 (at 144 [22] per Spender ACJ, Lander and Buchanan JJ). The "cardinal feature" of the Court's power to punish for contempt is to "protect the due administration of justice": Re Colina; Ex parte Topohey [1999] HCA 57; (1999) 200 CLR 386 (at 429 [112] per Hayne J). 9 Relevantly, civil contempt typically involves disobedience to a court order: Witham v Holloway (1995) 183 CLR 525 (at 530 per Brennan, Deane, Toohey and Gaudron JJ); Titan Support Systems Inc v Nguyen (No 2) [2015] FCA 359 (at [13] per Murphy J). Specifically, civil contempt exists to ensure compliance with the process and orders of the Court: Hearne v Street [2008] HCA 36; (2008) 235 CLR 125 (at 168 [133] per Hayne, Heydon and Crennan JJ); Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 (at 106 per Gibbs CJ, Mason, Wilson, and Deane JJ). 10 In Re Group Pty Ltd v Kazal (No 4) [2017] FCA 1084, Perram J summarised the elements that must be proven by the applicant to establish civil contempt (at [73]): 1. An order was made by a court; 2. The order was sufficiently clear such that one can be sure beyond reasonable doubt that the order was not complied with; 3. The order was served on the alleged contemnor or that service was for some reason dispensed with under some lawful order; 4. The alleged contemnor had knowledge of the terms of the order; 5. The alleged contemnor breached the order; and 6. The alleged contemnor took a deliberate step which, even if not intended to, beached the order… 11 The test for establishing civil contempt is objective: Alexander v Crawford [2003] NSWSC 426 (at [15] per Bryson J). A charge of contempt must be proven to the criminal standard of beyond reasonable doubt: Witham v Holloway (at 534 per Brennan, Deane, Toohey and Gaudron JJ); Kazal v Thunder Studios Inc (California) [2017] FCAFC 111; (2017) 256 FCR 90 (at 109 [21] per Besanko, Wigney and Bromwich JJ).

D Contempt 12 Although in the end the actions of Mr Garrett in acting contrary to the Orders was not contested, I record I am satisfied beyond reasonable doubt that Mr Garrett has acted in contempt of the Court as alleged by APRA, for the following reasons. 13 The Orders specified in clear terms what Mr Garrett was not permitted to do. Accordingly, the Orders made by this Court were "clear and ascertainable" so as to be capable of compliance: Australian Consolidated Press Ltd v Morgan (at 492, 503 per Barwick CJ). 14 On 14 August 2023, the NSW Registry, by way of email, served the parties, including Mr Garrett with the Orders: Affidavit of Mr Benjamin Allen, sworn on 21 September 2023 (First Allen Affidavit) (at [10]). On 16 August 2023, Mr Garrett was also personally served with the Orders: First Allen Affidavit (at [10]). 15 Mr Garrett had knowledge of the Orders. The Orders were brought to the notice of Mr Garrett on numerous occasions. First, by the email attaching the Orders sent by the Registry to Mr Garrett on 14 August 2023: First Allen Affidavit (at [10]). Secondly, by way of personal service on 16 August 2023: First Allen Affidavit (at [10]). Thirdly, by the email sent to Mr Garrett by APRA on 21 August 2023 notifying him that he may be in breach of the Orders: First Allen Affidavit (at [15]). Fourthly, by the email sent to Mr Garrett by APRA on 11 September 2023 notifying him that he may be in breach of the Orders: First Allen Affidavit (at [15]). 16 Accordingly, I am satisfied beyond reasonable doubt that Mr Garrett knew of the Orders, but despite this knowledge, acted in the following manner: (1) between 15 August 2023 and 26 September 2023, Mr Garrett sent emails from "andrew.garrett@dynamic-capital-bank.com" with an email signature whereby Mr Garrett purported to be the chairman of DCB: First Allen Affidavit (at [11(a)], [11(b)], [11(c)], [11(e)], [11(g)]); Affidavit of Mr Allen, sworn on 6 October 2023 (Second Allen Affidavit) (at [7(a)], [7(b)], [7(c)]). (2) on 26 September 2023, Mr Garrett sent emails from "andrew.garrett@dcbank.au" with an email signature whereby Mr Garrett purported to be the chairman of DCB: Second Allen Affidavit (at [7(d)], [7(e)], [7(f)]); (3) between 27 September 2023 and 5 October 2023, Mr Garrett sent emails from "amg@betterworldfuture.org" which included a link to DCB Website "www.dynamiccapitalbank.capital": Second Allen Affidavit (at [7(g)], [7(h)], [7(i)], [7(j)]); and (4) between 17 August 2023 and 27 October 2023, the DCB Website found at "www.dynamiccapitalbank.capital" remained operational and accessible: First Allen Affidavit (at [12]-[14], [15(c)], [15(d)]; Second Allen Affidavit (at [7(g)], [7(h)], [7(i)], [7(j)], [7(k)]). 17 It follows that I am satisfied to the requisite standard that in breach of the Orders, Mr Garrett continued: (1) in breach of Order 2(a), to carry on a banking business in Australia in contravention of s 7 of the Banking Act; (2) in breach of Order 2(b), to assume or use the words "bank", "banker", "banking", "banca", "banque" or any words or phrases of like import (whether or not in English) in relation to any purported bank, business or purported business in contravention of s 66 of the Banking Act; (3) in breach of Order 2(c), to advertise, represent or state that any purported bank, business or purported business will carry on banking business; and (4) in breach of Order 3, to carry on activities incidental to carrying on a "banking business" as defined by s 5 of the Banking Act.

E PUNISHMENT 18 When it comes to the appropriate remedial response, this is an unusual case. 19 This morning, Mr Garrett expressed regret and has explained that he had no intention of breaching the Orders at the time that he engaged in the contravening conduct and has no intention of breaching the Orders in the future. He did not intend to flout the authority of the Court. Despite this, Mr Garrett feels very strongly as to various matters which are canvassed at great length in the voluminous material he has provided to the Court. 20 I am prepared to act on the basis that Mr Garrett's actions, albeit mistakenly, are attributable to his zeal in relation to the matters in respect of which he complains, and a failure to pay appropriate regard to the nature of the Orders. It is worth noting, however, that a choice by Mr Garrett to remain wilfully blind as to the terms of the Orders does not protect him from being found liable for contempt: Humane Society International Inc v Kyodo Senpaku Kaisha Ltd [2015] FCA 1275; (2015) 238 FCR 209 (at 214 [18] per Jagot J). 21 The Court has a wide range of penalties available to it, which were usefully summarised by Nicholson J in Australian Competition and Consumer Commission v INFO4PC.Com Pty Ltd [2002] FCA 949; (2002) 121 FCR 24 (at 54 [138]) as follows: The Federal Court has a wide range of penalties open to it… and includes the power to: (a) commit a contemnor to prison for an indefinite period of time… (b) to impose a fine for a wilful breach of an order or undertaking… (c) to impose a daily fine… (d) to order the sequestration of the assets of a contemnor… (e) to suspend on condition any sentence of imprisonment that it might impose in respect to contempt… 22 In Kazal v Thunder Studios Inc (California), Besanko, Wigney and Bromwich JJ (at 113 [101]) quoted with approval a relevant, although not exhaustive list of matters to consider when determining an appropriate punishment for contempt, which appears in Matthews v ASIC [2009] NSWCA 155 (at [129] per Tobias JA): 1. The seriousness of the contempt proved; 2. The contemnor's culpability; 3. The reason or motive for the contempt; 4. Whether the contemnor has received, or sought to receive, a benefit or gain from the contempt; 5. Whether there has been any expression of genuine contrition by the contemnor; 6. The character and antecedents of the contemnor; 7. The contemnor's personal circumstances; 8. The need for deterrence of the contemnor and others of like mind from similar disobedience; and 9. The need for denunciation of contemptuous conduct. 23 I have had regard to these matters to the extent they have been the subject of evidence or submissions. In all the circumstances, and after hearing the expression of my preliminary views as to an appropriate remedial response, both APRA and Mr Garrett do not wish to be heard against the proposition that Mr Garrett be found to have committed the contempt charged, and fined a sum of $10,000 (with the fine to be suspended for a period of 18 months from the date of this judgment, conditional upon his compliance during that period with the Orders dated 14 August 2023). 24 This seems to me to be a sensible approach which recognises and reinforces the authority of the Court, while being appropriately adapted to recognise Mr Garrett's contrition and express intention to comply with the Orders. Further, this approach recognises the importance of specific and general deterrence in sentencing for contempt and will serve to focus Mr Garrett's mind on the need to ensure compliance. 25 Needless to say, I have explained to Mr Garrett that, in the event that he does act contrary to the Orders, not only will the condition upon which the fine has been imposed be satisfied, but the Court would look very seriously on the repetition of such conduct in all the circumstances.

F CONCLUSION 26 I will make the following orders. 1. Pursuant to s 31 of the Federal Court of Australia Act 1976 (Cth) and r 42.02 of the Federal Court Rules 2011 (Cth) the respondent, Mr Andrew Morton Garrett, be convicted on the charge of contempt in the statement of charge filed by the applicant (APRA) on 21 September 2023. 2. Mr Garrett pay a fine in the sum of $10,000 to be suspended for a period of 18 months from the date of these orders, conditional upon Mr Garrett's compliance with the Orders and Penal Notice dated 14 August 2023. 3. Mr Garrett pay APRA's costs of and incidental to the proceeding. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee.