Australian Securities and Investments Commission, in the matter of Storm Financial Limited (Receivers and Managers Appointed) (Administrators Appointed) v Storm Financial Limited

AND: STORM FINANCIAL LIMITED (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED) ACN 064 804 691

REASONS FOR JUDGMENT 1 I delivered judgement on 26 March 2009 in respect of the substantive application made by ASIC: Australian Securities and Investments Commission; in the matter of Storm Financial Limited (Receivers and Managers Appointed) (Administrators Appointed) v Storm Financial Limited (Receivers and Managers Appointed) (Administrators Appointed) [2009] FCA 269. Both in the course of submissions and after delivering judgement on 26 March 2009, I raised with the parties the question of what further material, if any, beyond that referred to in O 46 r 6(2) of the Federal Court Rules, ought to be the subject of a grant of leave to a non-party to inspect on the Court's file. 2 I did that of my own motion because of the wider interest in the case which was evident from the large attendance in the public gallery in the course of the hearing and because, from the evidence led, I apprehended that there was a yet wider interest in the proceeding. Given that, it seemed to me desirable, while the issues and evidence in the case were freshly in my and the parties' minds, to give the Registrar the benefit of a direction in a general and pre-emptive way in relation to which further documents might be inspected by a non-party. That was so even though a non-party had not yet made a request for access. 3 To that end, I made directions for the filing of submissions by the parties on the subject. The now former administrators of Storm Financial, who became the liquidators of that company by virtue of the orders I made, immediately indicated by an oral submission by their solicitor that they had no objection to a general grant of leave. Each other party has taken advantage of that opportunity to make a written submission. 4 I have considered each of the submissions, oral and written. 5 For its part, ASIC has no specific objection to a grant of leave. Nor does it seek an order that any particular affidavit or exhibit ought to be the subject of a confidentiality order. It does though submit that, in considering the subject of leave, "the Court should be mindful that certain affidavit material filed and/or read into evidence may not have been relevant or relied upon by the Court in reaching a final determination and/or the contents may have remained 'untested' in the sense that their deponents were not subject to cross-examination". 6 The receivers and managers of Storm Financial in their written submission took a like position to that which had been voiced orally on behalf of the now former administrators. 7 For their part, Mr and Mrs Cassimatis submitted that there was "no identified basis for the proceedings to be better understood by members of the public by the release of [material beyond that referred to in O 46 r 6(2)] …. Respectfully, in the circumstances of the case, it would be prone, at least in the minds of some reasonable observers, to the unappealing implication that the departure from O 46 r 6(3) may be engaged by the extent of interest by the popular press rather than the inherent likelihood of wider dissemination of the material making the court process better understood". They drew particular attention to Exhibits MRR1 and MRR 2 to the affidavit of Mr Ryan, an officer of ASIC, whose affidavit had been filed in Court by leave on 18 March 2009 when the originating application was likewise filed. It was submitted that there exhibits had been the subject of objection and did not feature in the reasons which I published in respect of the substantive application. Mr and Mrs Cassimatis submitted that there was no present occasion for the granting of leave and that it was better to await such application for leave as might be made and then to consider the same on its particular merits. 8 It is a given under our system of justice that, save in exceptional circumstances, the ideal that justice should not only be done but be seen to be done dictates that hearings are conducted in public. That notion is taken up by the requirement, flowing from s 17 of the Federal Court of Australia Act 1976 (Cth), that, unless the interests of justice otherwise dictate in a particular case, hearings of substantive applications occur in public. That section envisages that what one might term pre-trial procedural applications need not be conducted in public. 9 Such public administration of justice and the consequent ability for the public freely to observe it and for the media readily to report it is a safeguard against the abuse of the very considerable authority entailed in the exercise of the judicial power of the Commonwealth: R v Davis (1995) 57 FCR 512 at 514. 10 Observation of the administration of justice is one thing; the ability freely to inspect every document on the Court's file is another. So much is evident from the structure of O 46 r 6. Rule 6(2) lists out those types of document which may be inspected as of right with r 6(3) then providing that the ability to inspect other types of document requires a grant of leave. As to the latter, while there may be a general disposition to permit a non-party to have access to such non-confidential affidavits and exhibits as are admitted into evidence: Seven Network Ltd v News Ltd (No 9) (2005) 148 FCR 1, at [26], the extent of further access must in each case be considered on its merits. That is so even in relation to material read in open court or referred to by a judge: Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 3) (2002) ATPR 41-873 at [7]. One factor which can be relevant to the withholding of access is the approach adopted by the parties to objections to evidence. 11 In this case objection was taken on behalf of Mr and Mrs Cassimatis to the admission of Exhibits MRR1 and MRR2 to Mr Ryan's affidavit. Those exhibits respectively comprised a bundle of responses by investors, rendered anonymous by obliteration of name and other identifying particulars, to a standard form questionnaire directed to them by ASIC and a summary of those responses prepared by ASIC's investigator. 12 Contrary to the submission made on behalf of Mr and Mrs Cassimatis, it is not correct to state that neither Exhibit MRR1 nor Exhibit MRR2 feature in the reasons for judgement in respect of ASIC's substantive application. The fact that ASIC had already received numerous investor complaints is expressly mentioned: see para 70. What I further there observe is, "Whether there is any merit in them is not able to be determined in the present proceedings. The very fact that such complaints are being made is but another factor which is indicative of a need in the context of a corporate collapse like this, for a winding up now, not consigning that choice to creditors and potentially delaying a winding up for up to 120 days". 13 In the result, I did not understand ASIC to press the tender of Exhibits MRR1 and MRR2 beyond evidencing the fact of numerous investor complaints and their nature. In any event, the only use made of them by me is recorded in my reasons for judgement with the result that it became unnecessary to consider, given the objection, whether they had any other relevance to the proceeding. 14 The limited use made of Exhibits MRR1 and MRR2 to the affidavit of Mr Ryan does mean, in my opinion, that it would not be appropriate to grant leave for them to be inspected, at least in a pre-emptive way. Save for those exhibits, it seems to me that Mr Ryan's affidavit ought to be the subject of a general grant of leave to any non-party to inspect its contents. The body of the affidavit consists of a narrative of the circumstances leading up to the making of ASIC's winding up application. The other exhibits to it consist of the administrators' report to creditors, the Information Memorandum and of correspondence between Russell & Co on behalf of Mr and Mrs Cassimatis and ASIC. I referred to or extracted some of this material in my reasons for judgement. It would assist the understanding of a non-party of the proceedings to be able freely to inspect this material. 15 Beyond this, it seems to me that there should be no general, pre-emptive grant of leave to inspect material on the court file or the transcript. Rather, that is a subject best considered in the circumstances of a particular application and in light of the submissions offered by the parties to date. Particularly that is so given that there remains a controversy pending in the Supreme Court of Queensland in relation to the payment of $2 million made in December 2008 and that, in this Court, it was conceded that there existed a serious question to be tried in those Supreme Court proceedings. 16 Another consideration which persuades me that this is the better course to take at present is that the disposition of ASIC's substantive application rendered unnecessary the determination of the separate application made by Mr and Mrs Cassimatis for remedial relief and related orders in respect of alleged shortcomings in the administrators' report to creditors. It is to be remembered that the affidavit material read on their behalf and the oral evidence of Mr Russell and Mrs Cassimatis was tendered in respect of that application as well as that of ASIC. I have made some reference to this evidence in my reasons for judgement in respect of ASIC's application. The use that I have made of it is evident in those reasons. At least as presently advised, the extent of that reference and use is not such as would persuade me that the interests of open justice require unfettered access by a non-party to all of that other material. There was much in it which principally related to an application which was heard but which became unnecessary to determine. 17 Perhaps in the context of a particular access application the position so far as greater access is concerned may appear different, but that is to anticipate. 18 For these reasons, I give the following directions to the Registrar pursuant to O 46 r 6: (a) in addition to those documents the inspection of which is permitted by O 46 r 6(2), leave is granted to any non-party to inspect the following document: the affidavit of Mr Michael Ross Ryan filed in court by leave on 18 March 2009, save for Exhibits MRR1 and MRR2 to that affidavit; (b) the question of whether leave should be granted to a non-party to inspect any further document, including Exhibits MRR1 and MRR2 aforesaid, is reserved; (c) liberty to apply in that regard is reserved. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.

Associate: Dated: 1 April 2009 Counsel for the Plaintiff: Mr AJ McInerney

Solicitor for the Plaintiff: Australian Securities and Investments Commission

Counsel for the Receivers and Managers of the First Defendant: Mr GA Thompson SC

Solicitor for the Administrators of the First Defendant: Tucker & Cowen Solicitors

Counsel for the Second and Third Defendants: Mr P Dunning SC

Counsel for the Second and Third Defendants: Mr C Jennings

Solicitor for the Second and Third Defendants: Russell and Company Solicitors