Australian Prudential Regulation Authority v Siminton

REASONS FOR JUDGMENT 1 On 30 March 2006, I found that the respondent ('Siminton') had committed contempt by breaching and failing to comply with certain orders made by Sundberg J on 15 December 2006 ('the Sundberg J orders): see Australian Prudential Regulation Authority v Siminton [2006] FCA 326 ('the first judgment'). These reasons for judgment use the terms employed in, and are to be read together with, the first judgment. 2 The contempts committed by Siminton fall into two categories. The first category consisted of Siminton dealing with, and giving instructions in relation to, the disposition of moneys in certain bank accounts in the manner set out in charges 1.1 and 1.2 of the first statement of charge and in charges 1.1, 1.2, 1.3 and 1.4 of the second statement of charge ('the disposal contempts'): see [16]-[30] of the first judgment. The second category, which consisted of a failure by Siminton to post notices on two websites, was the subject of charge 1.5 of the first statement of charge ('the website contempts'): see [38]-[41] of the first judgment. 3 APRA submitted that the disposal contempts amounted to criminal contempt. In particular, APRA submitted that the disposal contempts were 'a calculated and clandestine attempt to withdraw funds from the Terra Nova Cache account, in deliberate defiance of paragraph 2(b) [of the Sundberg J orders], indicating [Siminton's] attitude to the Court's authority.' APRA pointed to, inter alia, the following factors to support its contention: 'The [disposal] contempts involve breaches…on 5 separate occasions… The Respondent deliberately disobeyed the orders. Large sums of money are involved in the breaches of paragraph 2(b) - electronic transfers of $622,880 … and an attempted cash withdrawal of $500 000. The contempts…were calculated and disguised. The contempts were committed in the context of proceedings against the Respondent alleging contraventions of the Banking Act where public funds may have become imperilled. There are no mitigating factors, such as contrition (the Respondent has not put on any affidavit material in support of his defence).' 4 I am satisfied that APRA's submissions as to the nature of Siminton's contempts are supported by the evidence and are plainly correct. On the evidence before the Court, it is clear that Siminton's disposal contempts were of an extremely serious kind and constituted wilful disobedience and contumacious disregard of the Court's orders. The seriousness of the breaches is underlined by the fact that Siminton's conduct was precisely the kind of conduct against which Sundberg J sought to guard by the making of the orders the subject of the contempt charges. The conduct involved the actual transfer of large sums of money ($536 880.18, $38 000, $43 000, $5 000 and $10 000 respectively) and an attempted cash withdrawal from a Bendigo Bank account of $500 000, all of which occurred shortly after Siminton became aware of the Sundberg J orders. I would add that the failure of Siminton to obtain the cash withdrawal of $500 000 from the Bendigo Bank account came about fortuitously and not as a result of any change of mind on the part of Siminton. I am prepared to infer that the nature and sequence of the transfers effected by Siminton, and his attempt to withdraw a significant amount of cash from an account with which he had no previous association, were an attempt by Siminton to avoid detection by APRA. I can more readily draw that inference in the absence of any explanation of the transactions in question by Siminton. The seriousness of the disposal contempts is exacerbated by the fact that, as a result of the transfers made in breach of the orders, amounts of $5 000, $10 000 and $43 880.18 (ie $617 880.18 transferred to Agios account via Technocash less $574 000 transferred from that account to the Bendigo Bank account) appear to have been taken outside the direct protection of the Sundberg J orders. That observation is made on the assumption that the $574 000 transferred to the Bendigo Bank account (of which Siminton attempted to withdraw $500 000) is still within the direct protection of the Sundberg J orders. 5 Because of the belated compliance by Siminton with the Sundberg J orders in relation to posting notices on the two websites, the website contempts are less serious. Although the website contempts evidence a disregard by Siminton for the orders of the Court, they would not, standing alone, warrant a term of imprisonment. 6 The findings set out above are based on the evidence adduced at the hearing on liability and on APRA's written submissions on liability and penalty filed prior to the penalty hearing. Siminton's response to APRA's evidence and submissions was to continue to maintain, as he is entitled to do, that he 'is constrained from personally giving evidence in support of his plea by his exercise of the right against self-incrimination'. Another response was to file some material to the effect that his solicitor was making an endeavour to settle the main proceeding. Siminton also filed a statement by a friend stating that he was of good character. His counsel supplemented that statement from the bar table. The responses set out above are relevant to penalty but, having regard to the seriousness of the contempt, carry little weight on the issue of penalty. 7 Siminton's counsel also relied on the fact that Siminton had no prior contempt convictions and had eventually posted at least one of the requisite notices. I accept that both of those matters should be taken into account in Siminton's favour on the issue of penalty. 8 It was contended on Siminton's behalf that there is no real risk of ongoing defiance of the Court or disobedience such as would justify imprisonment. His counsel contended that the appropriate penalty was a fine or a suspended sentence. 9 In Louis Vuitton Malletier SA v Design Elegance Pty Ltd [2006] FCA 83, I accepted the following submission, which was made on behalf of the applicant in that case, as accurately setting out the principles relevant to the question of penalty for contempt: '1.5 In deciding the appropriate penalty, a court should consider the following factors: (1) contemnor's personal circumstances; (2) nature and circumstances of the contempt: R v West Australian Newspapers Ltd; Ex Parte DPP (WA) (1996) 16 WAR 518; (3) effect of the contempt on the administration of justice: Durack v Gallagher (1982) 44 ALR 272 at 286-7; (4) contemnor's culpability: Durack v Gallagher (1982) 44 ALR 272 at 286-7; (5) need to deter the contemnor and others from repeating contempt: DPP v John Fairfax & Sons Ltd (1987) 8 NSWLR 732, Kirby P at 741; and (6) absence or presence of a prior conviction for contempt: Attorney-General (NSW) v Macquarie Publications Pty Ltd (1988) 40 A Crim R 405 at 410. However, other criminal history is irrelevant: R v Giscombe (1984) 79 Cr App R 79 at 84. 1.6 In deciding the amount of any fine the Court should take into account the contemnor's financial means: Smith v R (1991) 25 NSWLR 1. The court may also suspend the fine on terms. Contrition and apology 1.7 Genuine contrition and a full and ample apology may also reduce the penalty: R v Gray [1900] 2 QB 36 at 41-2; Superstar Australia Pty Ltd v Coonan & Denlay Pty Ltd (No 2) (1982) 65 FLR 432 at 436. Imprisonment 1.8 It is widely accepted that the court should only impose a term of imprisonment in the most serious criminal contempt cases: Keeley v Justice Brooking (1979) 143 CLR 162 at 179; Gallagher v Durack (1983) 152 CLR 238. 1.9 In Deputy Commissioner of Taxation v Hickey [1999] FCA 259, Carr J held that imprisonment is a "last resort": see also R v Vasin (1985) 39 SASR 45; James (1985) 14 A Crim R 364; Skipper (1992) 64 A Crim R 260.' 10 As I explained at [10]-[11] of the first judgment, the distinction between civil and criminal contempt has lost much of its significance. In so far as the distinction might be relevant to penalty, I am satisfied that the disposal contempts involved deliberate defiance of the Sundberg J orders and constituted a criminal contempt. As stated above, because the disposal contempts were disguised steps calculated to defeat, and which in part defeated, the purpose of the Sundberg J orders, they amount to particularly serious contempts. 11 Although Siminton has not gone into evidence about his contempts, I am prepared to give him the benefit of the doubt in relation to the website contempts, in that I am prepared to regard them as not involving deliberate defiance. Accordingly, in so far as it may be relevant to penalty, I treat those contemps as civil contempts. 12 Siminton has provided no evidence about his financial circumstances. However, APRA has adduced some evidence relevant to that matter. He was made bankrupt on 9 August 2001 and has failed to provide a statement of affairs or to deliver up his passport as required by the Bankruptcy Act 1966 (Cth) ('the BA'). As a discharge usually only occurs three years after the filing of a statement of affairs, the bankruptcy is likely to continue for at least three more years. Under s 58 of the BA, the property of Siminton, including 'after-acquired property' as defined in s 58(6), vested in his trustee on his bankruptcy. A fine imposed on a bankrupt is not provable in bankruptcy (see s 82(3) of the BA). There is no evidence that Siminton has any capacity to pay a fine and the interlocutory orders made in the proceeding prevent him from accessing any of the funds upon which he might otherwise lawfully draw upon to pay any fine. 13 In all the circumstances, the imposition of a fine on Siminton is not likely to have a significant effect upon him and, in any event, would be insufficient to vindicate the authority of the Court in respect of the disposal contempts. 14 Counsel appearing for Siminton offered an 'unreserved apology' on behalf of his client but stated that Siminton maintains his plea of not guilty and proposes to appeal. As was stated by RD Nicholson J in analogous circumstances in Australian Competition and Consumer Commission v Info4pc.com (2002) 121 FCR 24 at 57-58 [155], such an apology does not 'demonstrate any remorse to be taken into account'. Siminton's counsel also proffered an undertaking to comply with all of the orders of the Court. That undertaking is to do no more than Siminton is obliged to do in any event. 15 In the result, there is no evidence upon which I would be prepared to act that Siminton has displayed any regret, remorse or contrition about his contempts. 16 I accept that imprisonment should be a last resort but, having regard to the circumstances outlined above, I am in no doubt that in relation to the disposal contempts a term of imprisonment is both appropriate and necessary to vindicate the Court's authority. I regard personal deterrence as remaining a significant factor but I regard general deterrence as being of particular importance in the present case. Freezing orders of the kind made by Sundberg J are commonly made by the courts in order to preserve the status quo pending an interlocutory or final hearing. If such orders were seen as being able to be disobeyed with impunity that would significantly undermine the ability of the courts to effectively administer justice according to law. 17 As with any deliberate defiance of the Court's orders, Siminton's disposal contempts have a severe and deleterious effect on the administration of justice. I observed in Australian Industry Group v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2000] FCA 629 at [79] that the rule of law in a democratic society does not permit any member of the society to pick and choose the laws or court orders that are to be observed and those that are not. I added: 'Maintenance of the rule of law in our society does not only require that parties are able to resort to courts to determine their disputes (Patrick Stevedores Operation No 2 Pty Ltd v Maritime Union of Australia (1998) 153 ALR 641 at [1] per Hayne J), it also requires that parties comply with the orders made by the courts in determining those disputes.' 18 In Pelechowski v The Registrar, Court of Appeal (1998) 198 CLR 435 at 463 [88] McHugh J observed: 'if breaches of court orders were regarded as of little moment, respect for and observance of the law would inevitably deteriorate and, ultimately, pose a threat to social order.' 19 In my view, the object of general deterrence in the present case requires that a penalty be imposed that protects the effective administration of justice by demonstrating that the Court's orders cannot be disobeyed with impunity. 20 APRA submits that for each of the disposal contempts the appropriate penalty is a sentence of imprisonment of nine months and that for each of the website contempts the appropriate penalty is a sentence of one month, with the sentences to be served concurrently. 21 The Court has a broad discretion as to penalty. Having regard to the factors set out above and the matters put forward by counsel on behalf of Siminton, the appropriate term of imprisonment for the disposal contempts is 10 weeks. I would add that had there been any prior contempt convictions, the penalty would have been significantly greater. I am also not prepared to accede to Siminton's submission that any sentence of imprisonment should be suspended. In the present case, there are not sufficient mitigating circumstances to justify suspending the sentence. 22 As explained above, the website contempts did not involve deliberate defiance and therefore do not warrant imprisonment. Although I have expressed doubt as to the efficacy of a fine in respect of Siminton, I have decided that a fine of $5 000 is appropriate in respect of the website contempts. In arriving at that figure, I have given particular weight to the absence of any satisfactory explanation, regret, contrition or remorse on Siminton's part. 23 APRA sought to have Siminton pay its costs in respect of the contempt motions on a 'party-party' basis. I am satisfied that APRA is entitled to have its costs paid on that basis. Although APRA failed on its 'failure to file allegations', those allegations played a very small part in the contempt case. In the circumstances, I am prepared to order that Siminton pay APRA's costs of and incidental to the contempt proceedings on a party-party basis. As APRA pointed out, costs orders against a bankrupt are subject to s 58(3) of the BA. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Merkel J.