Australian Securities and Investments Commission v Albarran

REASONS FOR JUDGMENT: PENALTY Introduction 1 On 26 February 2008 I ordered, pursuant to s 219(7)(b) of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act"), that Mr Albarran be punished in the same manner as if he had been guilty of contempt of Court, for his refusal or failure to answer 37 questions that were put to him by the Panel Chairman of the Companies Auditors and Liquidators Disciplinary Board. 2 I have now heard submissions as to the punishment to be imposed. Counsel for ASIC submitted that the circumstances of this case call for the imposition of a substantial fine. ASIC also seeks an order that Mr Albarran pay its costs on an indemnity basis. 3 Unless otherwise indicated, all paragraph references in these reasons refer to my decision in Australian Securities and Investments Commission v Albarran [2008] FCA 147. The contempt power and the punishment options 4 Section 219(7) of the ASIC Act confers power on the Court to punish, as on contempt, a person who fails to attend before the Board, or who fails to answer a question when required to do so by the Chairman. 5 As a statutory analogue for the exercise of the power to punish for contempt, no question arises under s 219(7) as to the Court's power of punishment. In any event, the Court's power to punish for contempt is well-established: Siminton v Australian Prudential Regulation Authority (2006) 152 FCR 129 at [74]. 6 In Siminton, a Full Court observed at [74] that where a natural person is the contemnor, the Court has power to impose a fine, order that the person be committed to serve a term of imprisonment, or to order both a fine and imprisonment. The statutory sources of the power are s 31 of the Federal Court of Australia Act 1976 (Cth), s 24 of the Judiciary Act 1903 (Cth) and rule 11.04 of the High Court Rules. 7 The distinction between civil and criminal contempt is no longer of any practical significance: Witham v Holloway (1995) 183 CLR 525 at 534. Nevertheless, a number of relevant principles are to be found in their Honours' analysis of the distinction that was previously thought to underlie the difference between the civil and criminal species of contempt. 8 First, disobedience to a court order or breach of an undertaking to a court amounts to a criminal contempt if it involves deliberate defiance or is contumacious: Witham v Holloway at 530. A contempt which is characterised in this way is therefore at the more serious end of the spectrum, although any contempt is a serious matter. 9 Second, proceedings for breach of an order or undertaking have the effect of vindicating judicial authority, and a remedial or coercive effect: Witham v Holloway at 533. 10 Third, as was earlier observed by the High Court in Australasian Meat Industry Employees' Union v Mudginberri Station Proprietary Limited ("Mudginberri") (1986) 161 CLR 98 at 108, the punitive and remedial objects of the exercise of the contempt power are inextricably intertwined: Witham v Holloway at 533-534. 11 In Mudginberri their Honours referred to the "strong stream" of authority for the proposition that a fine may be imposed when the contempt consists of wilful disobedience of a court order, at least in the sense that the disobedience is not "casual, accidental or unintentional": 106-107, 109, 112-113. 12 Reference was also made in Mudginberri to the underlying rationale of every exercise of the contempt power, namely the need to uphold and protect the effective administration of justice. Their Honours quoted from the then current edition of the seminal work on the law of contempt, Borrie & Lowe's Law of Contempt (2nd ed, 1983): if a court lacked the means to enforce its orders, or if its orders could be disobeyed with impunity, the administration of justice would be brought into disrepute. 13 In Deputy Federal Commissioner of Taxation v Hickey (1999) 99 ATC 5124 at [35], Carr J said: Any contempt of court is serious. The seriousness transcends matters such as the personal dignity of the judiciary, or the rights in this case of the Commissioner as a litigant in this Court. The offence involves interference with the effective administration of justice, by impeding and perverting its course: Johnson v Grant (1923) SC 789 at 790per Lord President Clyde. Contempt of court is a matter of basic and public significance. Unless the laws of contempt are properly enforced our whole system of justice is at risk. 14 In BHP Steel (AIS) Pty Limited v Construction, Forestry, Mining and Energy Union [2001] FCA 336, Kiefel J said at [3]: Penalties for contempt of Court orders necessarily recognise that the Court's authority must be vindicated, and that there is a public interest in compliance with all orders of the Court: Witham v Holloway (1995) 183 CLR 525, 533. Orders for penalties recognise the need to deter not only the defaulting party, but others who might be like-minded. 15 The statutory scheme which underlies the conferral of power on the Court under s 219(7)(b) recognises that it is through the exercise of judicial power under Ch III of the Constitution that the authority of the Board is to be vindicated. 16 The Board is furnished with a very significant disciplinary and regulatory function in the exercise of its power under s 1292 of the Corporations Act 2001 (Cth)to cancel or suspend the registration of an auditor or liquidator. 17 In aid of its disciplinary function the Board is given power in s 219 of the ASIC Act to summons witnesses and to require them to answer questions. 18 As Emmett J remarked, in a different statutory context, in Australian Securities & Investments Commission v Pappas [2007] FCA 672 at [23], the power to examine witnesses is a significant one which is conferred in the public interest. His Honour continued: Members of the public should understand that failure to comply with orders of the Court requiring compliance with the Commission's requirements in connection with investigation will not be treated lightly. 19 In my view, his Honour's remarks are equally applicable to the failure to comply with the Board's requirements, in the exercise of powers that are conferred on it in the public interest. 20 It follows from these authorities, and from the statutory regime to which I referred at [13] - [21] of my principal judgment, that an appropriate penalty would be one which signifies to Mr Albarran and to the public, that failure to comply with the obligation to answer the Board's questions will be treated no less seriously than it would in the exercise of similar functions by a Court.